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THE  NATURE  OF  THE  RELATIONSHIP 
BETWEEN  ETHICS  AND  ECONOMICS 


A  DISSERTATION 

SUBLflTTED  TO   THE   FACULTY 

OF    THE    GRADUATE   SCHOOL   OF   ARTS   AND   LITERATURE 

IN   CANDIDACY   FOR    THE   DEGREE   OF 

DOCTOR   OF   PHILOSOPHY 

DEPARTMENT   OF  PHILOSOPHY 


BY 


CLARENCE  EDWIN  AYRES 


Philosophic  Studies,  No.  8 
THE  UNIVERSITY  OF  CHICAGO  PRESS 
CHICAGO,  ILLINOIS 
1918 


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THE  NATURE  OF  THE  RELATIONSHIP 
BETWEEN  ETHICS  AND  ECONOMICS 


A  DISSERTATION 

SUBMITTED  TO   THE   FACULTY 

OF   THE    GRADUATE   SCHOOL  OF   ARTS   AND   LITERATURE 

IN   CANDIDACY   FOR   THE   DEGREE   OF 

DOCTOR   OF   PHILOSOPHY 

DEPARTMENT   OF   PHILOSOPHY 


BY 

CLARENCE  EDWIN  AYRES 


Philosophic  Studies,  No.  8 
THE  UNIVERSITY  OF  CHICAGO  PRESS  p 
CHICAGO,  ILLINOIS 
1918 


Copyright  1918  By 
The  University  of  Chicago 


All  Rights  Reserved 


Published  November  191 8 


Composed  and  Printed  By 

The  University  of  Chicago  Press 

Chicaeo,  ifliDois,  U.S.A. 


PREFACE 

A  study  of  the  relation  between  the  problems  of  ethics  and 
economics  must  have  its  roots  in  the  material,  social,  and  intellect- 
ual environment  from  which  it  springs.  In  this  respect  it  is,  like 
everything  else  in  the  world,  a  part  of  the  evolutionary  process. 
Whatever  conclusions  a  man  may  reach  on  this  or  any  other  sub- 
ject, he  may  be  sure  of  one  thing — that  those  conclusions  were  not 
attained  "independently  "  of  the  intellectual  influences  under  which 
fortune  has  placed  him. 

If  he  would  make  his  ideas  clear  to  other  people,  therefore,  a 
man  ought  to  make  the  discussion  of  those  streams  of  thought  from 
which  he  has  drawn  those  ideas  a  part  of  the  exposition  of  his  own 
particular  conclusions;  for  if  he  does  this,  his  readers,  already 
familiar  with  the  general  movements  of  thought,  can  follow  his 
individual  excursion  naturally  and  easily. 

If,  on  the  other  hand,  a  man  prefaces  his  remarks  with  a  dis- 
cussion of  some  other  things,  from  which  he  thinks  he  can  lead 
more  logically  to  the  statement  of  his  theories,  he  not  only  endangers 
the  clearness  of  his  exposition  but  even  puts  himself  in  the  ridiculous 
position  of  trying  to  improve  upon  nature.  Like  the  schoolgirl 
who  wrote,  "Newton  discovered  three  very  good  laws  which  it 
would  be  well  for  all  of  us  to  follow,"  he  seems  to  say:  "This  idea 
of  mine  must  have  had  its  source  in  some  earlier  speculation ;  there- 
fore I  will  find  for  it  as  worthy  a  source  as  I  can."' 

The  ideas  which  were  the  real  cause  of  the  direction  one's  think- 
ing has  taken  are  obviously  a  more  fitting  introduction  to  the  state- 
ment of  the  results  of  that  thinking  than  any  others,  however 
authoritative  or  venerable,  could  possibly  be.  The  present  study 
of  the  relationship  between  ethics  and  economics  has  grown  out  of 
an  attempt  to. understand  the  functions  of  those  sciences  which  was 
inspired  by  my  first  teacher  of  philosophy,  President  Alexander 
]Meiklejohn,  and'  has  been  chiefly  guided  during  the  intervening 

'  Preferably,  for  the  philosopher,  in  Plato  and  Aristotle. 

V 


4G593.L 


vi  PREFACE 

years  by  his  friendly,  though  ruthless,  criticism.  Hence  I  think 
that  I  can  develop  my  present  notion  of  the  complementary  nature 
of  those  functions  both  more  clearly  and  more  sincerely  through  a 
preliminary  exposition  of  what  I  myself  conceive  the  functions  of 
ethics  and  of  economics  to  be  than  through  the  usual  critical  dis- 
cussion of  the  opinions  of  other  and  more  authoritative  writers  on 
the  relation  of  ethics  to  economics. 

But  although  clearness  and 'sincerity  are  sufficiently  important 
considerations  to  determine  the  form  which  this  paper  will  take, 
it  is  comforting  to  know  that  in  this  particular  case  no  other  course 
is  open  than  the  one  which  has  already  been  indicated;  for  if 
one  were  to  commence  a  study  of  this  sort  with  a  careful  critical 
survey  of  the  "field,"  intent  upon  making  this  theory  of  the  relation 
between  ethics  and  economics  seem  to  evolve  from  other  men's 
ideas  of  that  relation,  that  survey  of  the  current  theories  would 
either  be  a  mere  anthology  or  it  would  be  an  analysis  of  the  concep- 
tions of  ethics  and  economics  of  which  the  relation  theories  are 
particular  manifestations.  And  in  this  case  the  introductory  inves- 
tigation would  be  nothing  more  nor  less  than  a  study  of  the  nature 
of  ethics  and  economics  carried  on  under  the  mask  of  a  study  of 
current  views  of  the  relationship. 

Thus,  for  instance,  the  most  significant  feature  of  the  notions  of 
this  relationship  held  by  the  school  of  "value  philosophers"  is  that 
they  are  making  the  marginal  utility  economics  the  base  for  all  their 
operations.  Revolting  from  von  Wieser's  idealization  of  economics 
as  the  complete  science  of  value,^  they  have  proceeded  not  only  to 
make  ethics  "  ein  Zweig  der  allgemeinen  Werttheorie  "^  of  which  eco- 
nomics is  another  branch,  but  have  even  made  this  value  philosophy 
a  sort  of  universal  marginal  analysis,  and  thus  have  marginalized 
ethics.^  Hence  a  discussion  of  the  relation  theory  implicit  in  the 
German-American  value  philosophy  reduces  itself  to  a  discussion  of 
the  marginal  utility  conception  of  economics  and  of  the  notion  that 
ethics  is  a  metaphysics  of  "value." 

'  See  Perry,  "Economic  Values  and  Moral  Values,"  Quarterly  Journal  of  Econom- 
ics, XXX,  445;   also  Urban,  Valuation,  p.  3. 

*  C.  von  Ehrenfels,  System  der  Werttkeorie,  II,  6. 

3  See  Urban,  op.  cil.,  pp.  328  ff.;  also  Ehrenfels,  op.  cil.,  Book  II,  chap.  iii. 


PREFACE  vii 

Similarly,  it  is  not  possible  to  understand  Croce's  theory  that 
"the  individuals  who  seem  to  be  merely  economic  seem  to  be  also 
moral,  and  inversely  moral  institutions  are  also  economic,  and 
economic  moral,"'  except  through  a  recognition  of  its  central 
feature — Croce's  distinction  between  ethical  and  economic  activity. 
For  since  Croce  makes  the  field  of  economics  include  all  activity 
which  proceeds  toward  individual  ends,  and  since  he  excludes  from 
ethics  all  that  does  not  seek  a  universal  end,^  "we  cannot  fail  to 
recognize"  that  Croce  has  put  into  the  economic  form  of  practical 
activity — "the  judgment  of  convenience"^ — all  the  content  of 
both  economic  and  moral  affairs  as  we  understand  them.  Croce's 
"moral"  life  is  so. dehumanized  as  to  belong  in  quite  another  world 
of  discourse  from  the  morality  with  which  this  paper  deals.  There- 
fore the  connection  with  his  conception  of  the  relation  of  the  moral 
to  the  economic  could  be  made  only  through  a  careful  study  of  the 
differences  between  his  notions  of  economic  and  moral  problems 
and  those  which  the  writer  holds. 

The  same  thing  is  true  of  Fite's  peculiar  view  of  the  relation 
of  economic  and  moral  problems.  Any  attempt  to  deal  with  it 
becomes  at  once  a  discussion  of  the  nature  of  economic  and 
ethical  problems  and  theories.  Fite's  proposition,  that  "the  root 
of  all  the  differences  between  the  moral  world  and  the  economic 
world  'lies'  in  this  distinction  of  the  more  intimate  and  more 
distant  relations,"''  is  clearly  an  outcrop  of  his  conception  of  the 
nature  of  the  economic  and  moral  organization  of  society.  The 
clue  to  this  is  to  be  found  in  his  identification  of  "economic"  with 
the  economy  of  the  nineteenth  century  and  the  theory  which  it 
produced .  "  All  that  apparatus  of  exchange  which  constitutes  what 
we  call  an  economic  world  and  supplies  the  material  for  a  science  of 
economics,  is  distinctively  a  feature  of  modern  commerce.  "^  For 
Fite,  therefore,  the  economic  world  is  a  world  that  is  here,  and 
economic   theory   is   essentially   given.     Economic   problems    are 

'  B.  Croce,  Philosophy  of  the  Practical  (English  translation),  p.  311. 
^  Ibid.,  p.  313.  •s  Ibid.,  p.  316. 

^  Warner  Fite,  "Moral  Valuations  and  Economic  Laws,"  Journal  of  Philosophy, 
Psychology,  and  Scientific  Method,  XIV,  10. 
5  Ibid.,  p.  14. 


viii  PREFACE 

limited  to  the  operation  of  the  system  aheady  taken  for  granted. 
And  since  the  economic  order  is  an  automatic  machine  propelled  by 
the  impersonal  forces  of  competition,  the  field  of  the  moral  judg- 
ment must  be  that  of  the  personal  life — after  business  hours.  So  to 
question  Fite's  relation  theory  is  really  to  question  his  whole  con- 
ception of  the  field  of  economics  and  ethics.  Is  the  economic  order 
really  petrified,  or  is  it  so  susceptible  to  genetic  influences  that 
every  economic  act  entails  problems  of  the  effects  upon  the  social 
order,  problems  of  institutional  readjustment,  problems  of  progress 
toward  an  ideal  ?  Thus  the  relation  between  Fite's  theory  and  the 
writer's  can  be  traced  only  through  the  larger  disagreements,  in- 
volving "the  fundamental  nature  of  the  universe."^ 

It  is  not  necessary  to  multiply  examples;  it  is  already  clear  that 
a  study  of  the  logical  differences  between  this  and  other  theories  of 
the  relation  of  ethics  and  economics  must  necessarily  be  an  analysis 
of  the  underlying  conceptions  of  the  nature  and  function  of  those 
sciences. 

Since,  therefore,  my  ideas  must  find  their  logical  basis  in  a  dis- 
cussion of  the  conceptions  of  ethics  and  economics  between  which 
some  relationship  is  to  be  imputed,  and  since  they  are  a  concrete 
expression  of  the  notions  of  ethics  and  economics  to  which  I  have 
come,  under  the  influence  of  Professor  James  H.  Tufts  and  Professor 
Walton  H.  Hamilton,  I  am  sure  that  the  whole  paper  will  be  much 
more  clear  and  straightforward  if  its  conclusions  are  shown  to  be  the 
direct  development  of  the  social  and  intellectual  forces  which  have 
produced  those  movements. 

Waiving  all  claim  to  originality  beyond  that  of  clear  exposition, 
I  shall  endeavor  to  make  my  ideas  of  the  nature  of  the  relationship 
between  the  problems  of  ethics  and  economics  appear  to  the  reader 
— as  they  do  to  me — to  be  only  the  explicit  recognition  of  the  re- 
lation between  these  sciences  which  is  already  implicit  in  the  recent 

developments  of  ethical  and  economic  thinking. 

C.  E.  A. 

'  W.  H.  Hamilton,  "Economic  Theory  and  Social  Reform,"  Journal  of  Political 
Economy,  XXIII,  562. 


TABLE  OF  CONTENTS 

CHAPTER  PAGE 

I.  The  Function  and  Problems  of  Ethical  Theory      .     .     .     .      i 

II.  The  Function  and  Problems  of  Economic  Theory   ....     24 

III.  Ethics  and  Economics:    A  Study  est  the  Definition  of  Two 

Sciences 46 


CHAPTER  I 
THE  FUNCTION  AND  PROBLEMS  OF  ETHICAL  THEORY 


If  the  content  of  the  science  of  ethics  is  assumed  to  be  deter- 
mined by  the  treatises  of  ethicists,  then  the  history  of  ethics  is  the 
history  of  a  dualism.  For  practically  all  the  work  which  has  been 
done  in  ethics  up  to  the  present  time  has  been  done  simultaneously 
in  two  fields  and  upon  two  problems.  From  the  very  first  ethics 
has  attempted,  on  the  one  hand,  to  give  a  causal  explanation  of 
moral  phenomena  and,  on  the  other  hand,  to  propound  a  theory  of 
what  things  are  good  and  what  acts  right. 

Doubtless  these  two  problems  are  still  indistinguishable  from 
one  another  in  the  minds  of  many  students  of  ethics.  But  the 
difficulty  of  distinguishing  between  them  does  not  lie  in  an  external 
identity.  So  far  as  their  external  aspects  are  concerned,  the  analysis 
of  the  moral  consciousness,  the  examination  of  the  moral  judgment, 
-the  determination  of  the  nature  of  conscience  and  of  duty — ■ 
these  problems,  or,  rather,  this  problem,  is  clearly  enough  a  different 
thing  from  the  formulation  of  rules  of  conduct  and  the  definition  of 
a  moral  ideal.  Formally  speaking,  the  analysis  of  the  moral  judg- 
ment is  a  description  of  what  is,  while  the  formulation  of  the  goal  of 
right  living  is  a  description  of  what  ought  to  be. 

The  reason  for  the  assumed  indistinguishability  of  these  two 
problems  lies  beneath  the  surface  differences  in  the  relation  which 
has  always  been  supposed  to  exist  between  their  answers.  The 
fundamental  postulate  of  ethical  thinking  from  earliest  times  to  the 
twentieth  century  has  been  the  proposition  that  the  only  source  of 
moral  guidance  and  moral  progress  is  the  study  of  the  phenomena 
of  the  moral  judgment.  The  major  undeclared  assumption  of 
practically  all  ethicists  up  to  modern  times  has  been  the  belief  that 
the  answer  to  the  question,  "What  ought  I  to  do?"  is  to  be  found 
only  in  a  theological,  or  metaphysical,  or  psychological  analysis  of 
the  process  to  which  the  word  "ought"  refers. 


;',i  ;  ;/'   ■/RELAttONSRlP  HETWEEN  ETHICS  AND  ECONOMICS 

As  a  result,  however,  of  the  gradual  realization  to  which  ethics 
came  at  the  end  of  the  last  century,  of  the  cosmic  extent  and  com- 
plexity of  the  moral  problem,  a  grave  crisis  has  overtaken  the 
science.  We  are  today  in  the  process  of  bringing  the  tacit  assump- 
tion of  the  dependence  of  moral  doctrine  upon  metaphysico-psycho- 
logical  speculation  into  the  light  of  ruthless  criticism. 

The  magnitude  of  the  issues  of  this  crisis  can  be  appreciated 

•  properly  only  in  a  historical  study  of  ethical  methodology;  but 
such  a  study  can  only  be  indicated  in  this  paper,  since,  if  it  were  not 
limited  to  a  mere  sketch  of  a  single  period,  its  proportions  and  im- 
portance would  entirely  subordinate  the  purpose  for  which  this 
interpretation  of  the  recent  history  of  ethics  has  been  made.  For 
that  purpose  is  determined  by  the  future  rather  than  by  the  past 
methodology  of  ethics.  If  our  suspicions  of  the  practical  efficacy  of 
the  analysis  of  moral  consciousness  should  appear  to  be  well  founded, 
and  if,  during  the  next  decade,  they  should  be  heightened  and  jus- 
tified, then  that  field  will  have  to  be  definitely  abandoned  by  stu- 
dents of  morals.  The  attempt  to  reduce  the  life  of  the  individual 
and  of  society  to  some  sort  of  moral  order — to  make  life  more  worth 
living — will  begin,  not  with  a  brief  for  the  rationality  of  conscience 
or  for  the  instinctiveness  of  moral  reactions,  but  rather  with  a  sur- 
vey of  the  conditions  of  social  life.  In  order  to  put  more  meaning 
into  human  existence,  to  make  of  it  a  more  orderly  and  less  futile 
thing  than  it  has  ever  been,  we  shall  try  first  to  understand  the 

i,  meaning  of  the  life  we  are  now  leading.     If  this  paper  can  indicate 

the  relation  between  this  undertaking  and  the  more  specific  investi- 

-jgation  with  which  the  economist  is  engaged,  it  will  have  defined 

certainly  not  the  whole  methodology  of  the  new  ethics,  but  at 

least  one  small  corner  of  it. 

II 

The  three  great  ethical  treatises  of  the  later  nineteenth  century 
contained  little  augury  of  the  approaching  crisis  in  ethical  theory. 
But  in  so  far  as  they  carried  the  traditional  types  of  ethical  specu- 
lation to  a  higher  degree  of  refinement  than  had  ever  been  reached 
before,  they  constituted  one  of  the  important  causes  of  the  revul- 
sion against  the  traditional  ethics.     The  very  barrenness  of  work  so 


FUNCTION  AND  PROBLEMS  OF  ETHICAL  THEORY  3 

monumental  in  scope  as  that  of  Sidgwick,  Green,  and  Martineau  con- 
tributed largely  to  the  formulation  of  a  new  ethical  methodology. 

Sidgwick  recognizes  the  dual  nature  of  ethical  inquiry  at  the 
very  outset  of  his  book.  "I  prefer  to  consider  Ethics  as  the  science 
or  study  of  what  ought  to  be, "  he  says.'  This  is  a  clear  statement 
of  the  problem  of  human  welfare;  if  this  is  true,  it  is  the  business  of 
ethics  to  construct  a  system  of  moral  precepts  which  shall  define  the 
good  and  the  right.  One  cannot  restrain  a  smile  on  finding  that 
the  sentence  following  the  one  quoted  above  is  the  author's  apology 
for  the  fact  that  ethics — and  his  book — "consist,  to  a  great  extent, 
of  a  psychological  discussion  as  to  the  'nature  of  the  moral  fac- 
ulty.'"^ 

The  answer  to  this  paradox  seems  to  Sidgwick  to  be  somewhat 
as  follows :  "We  are  generally  agreed  that  reasonable  conduct  in  any 
case  has  to  be  determined  on  principles";^  there  are  many  different 
"principles"  which  the  common  man  may  make  the  basis  of  his 
conception  of  right  and  wrong;  "the  common  sense  of  men  cannot 
acquiesce  in  conflicting  principles";''  therefore  it  is  the  ethicist's 
business  to  determine  by  a  critical  examination  which  "principle" 
is  the  correct  one.  Consequently  the  book  is  to  be  a  discussion  of 
"methods  of  ethics,"  by  virtue  of  the  assumption,  explicitly  stated 
as  a  matter  of  "general  agreement,"  that  moral  guidance  can  be 
afforded  only  by  a  "principle,"  i.e.,  a  description  of  the  "nature  of 
the  moral  faculty.  "^  The  author  even  goes  so  far  as  to  deny 
definitely  any  intention  of  supplying  "a  set  of  rules  for  conduct."^ 

At  the  same  time  the  criterion  according  to  which  the  "methods 
of  ethics"  are  judged  is  their  fruitfulness  in  "rules  for  conduct." 
This  is  fair  enough,  in  view  of  the  major  assumption  that  principles 
of  analysis  of  moral  phenomena  are  the  source  of  every  moral 
precept. 

Empirical  hedonism  fails  because,  even  though  one  believes  that 
morality  consists  in  each  individual's  striving  to  attain  a  maximum 
of  happiness  for  himself,'  one  can  draw  no  practical  references  from 

■  Sidgwick,  Methods  of  Ethics  (4th  ed.),  p.  4. 

^  Ibid.  5  Ibid.,  pp.  6-14. 

3  Ibid.,  p.  5.  6  Ibid.,  p.  14. 

*  Ibid.  7  Ibid.,  Book  II,  chap.  i. 


4  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

that  proposition  on  account  of  the  incommensurability  of  pleasure.^ 
The  attempts  to  squeeze  water  from  the  hedonistic  stone  by  aban- 
doning the  calculus  of  pleasures  for  an  objective  estimate  of  the 
sources  of  pleasure  are  also  without  result.  The  common-sense  esti- 
mates of  the  sources  of  pleasure  are  not  sufficiently  stable  ;^  the  claim 
that  happiness  varies  with  attention  to  duty  is  not  borne  out  by  the 
facts  ;^  and  no  scientific  statement  of  the  causes  of  pleasure  and 
pain  can  supply  the  detailed  information  which  a  moral  situation 
demands.''    Therefore,  concludes  Sidgwick,  hedonism  is  a  failure. 

Intuitionism,  the  second  "method  of  ethics,"  seems  to  Sidgwick 
to  be  a  theory  "that  we  have  the  power  of  seeing  clearly  that  certain 
kinds  of  action  are  right  and  reasonable  in  themselves,  apart  from 
their  consequences " ;s  that  is,  it  is  a  different  theory  of  the  "nature 
of  the  moral  faculty."  And  Sidgwick  tests  its  validity  just  as  he 
does  that  of  egoism,  by  the  method  prescribed  by  the  assumption 
that  if  "a  set  of  rules  for  conduct"  cannot  be  deduced  from  the 
theory,  then  the  latter  is  incorrect. 

If  the  major  premise  of  intuitionism  is  true,  then  moral  in- 
tuitions must  either  be  heterogeneous  and  contradictory  or  organ- 
ized around  a  set  of  intuitively  determined  moral  axioms.  Such 
formulas  are  not  difficult  to  find,  but  they  are  usually  deficient  in 
clearness  and  precision.^  In  order  to  raise  these  axioms  by  reflec- 
tion to  a  higher  degree  of  precision  than  they  assume  in  common 
thought,  Sidgwick  undertakes  an  analysis  of  them  through  a  hun- 
dred and  fifteen  pages,^  as  a  result  of  which  he  concludes  that  they 
are  hopelessly  deficient  in  clearness  and  precision,  in  self-evidence, 
in  mutual  consistency,  and  in  universality  of  acceptance.* 

Still,  says  Sidgwick,  there  are  certain  moral  principles,  such  as 
prudence,  justice,  and  benevolence,  which  are  intuitively  known.' 
In  particular,  the  intuition  establishes  the  principle  of  rational 
benevolence.  The  utilitarian  theory  of  moral  consciousness  is  not 
logically  complete  without  the  postulate  of  an  intuitive  principle  of 

'  Sidgwick,  Methods  of  Ethics  (4th  ed.),  chaps,  ii-iii. 

'  Ibid.,  chap.  iv.  ^  Ibid.,  pp.  214-15. 

3  Ibid.,  chap.  v.  7  Ibid.,  pp.  216-331. 

^/6i(/.,  chap.  vi.  * /i/tf.,  Book  III,  chap.  xi. 

5  Ibid.,  p.  201.  9  Ibid.,  chap.  xiii. 


FUNCTION  AND  PROBLEMS  OF  ETHICAL  THEORY  5 

benevolence/  nor  can  it  otherwise  meet  the  criticisms  of  intuition- 
ism  and  egoism.^ 

It  is  obvious  that  the  crux  of  Sidgwick's  ethics  must  be  his 
demonstration  that  utiHtarianism,  reinforced  by  an  intuitional  prin- 
ciple of  rational  benevolence,  is  an  explanation  of  the  moral  life 
from  which  something  positive  may  be  inferred.  But  this  demon- 
stration fails  to  materialize.  The  author  contents  himself  with 
showing  in  one  long  chapter  that  the  moral  dicta  of  common  sense 
have  a  large  flavor  of  utilitarianism  in  them.  The  moral  conduct 
of  the  common  man — the  exercise  of  the  "moral  sense"  of  popular 
belief — is  unconsciously  utilitarian.^  Of  course  it  would  be  easy  to 
assume  that  the  extreme  compatibility  of  the  utiUtarian  explana- 
tion with  the  facts  of  common-sense  morality  indicates  that  the 
latter  has  the  utilitarian  explanation  of  moral  phenomena  as  its 
source.  But  apart  from  the  strain  which  such  a  proposition  would 
place  upon  the  credulity  of  the  critic,  this  theory  would  still  have  to 
encounter  the  facts  of  the  unclearness  and  inconsistency  of  current 
moral  precepts.  Sidg^vick  sees  this  difficulty  and  concludes  "that 
we  cannot  take  the  moral  rules  of  Common  Sense  as  expressing  the 
consensus  of  competent  judges,  up  to  the  present  time,  as  to  the 
kind  of  conduct  which  is  likely  to  produce  the  greatest  amount  of 
happiness  on  the  whole."'* 

But  the  only  alternative  is  to  show  that  out  of  the  utilitarian 
theory  there  can  be  deduced  a  "rule  of  conduct"  a  priori.  But 
Sidgwick  is  too  sane  a  man  to  believe  that  such  a  thing  is  possible. 
He  says: 

I  hold  that  the  utilitarian,  in  the  existing  state  of  our  knowledge,  cannot 
possibly  construct  a  morality  de  novo  either  for  man  as  he  is  (abstracting  his 
morality),  or  for  man  as  he  ought  to  be.  He  must  start,  speaking  broadly, 
with  the  existing  morahty  as  a  part  of  that  order;  and  in  deciding  the  question 
whether  any  divergence  from  the  code  is  to  be  recommended,  must  consider 
chiefly  the  immediate  consequences  of  such  divergence,  upon  a  society  in  which 
such  a  code  is  conceived  generally  to  subsist. s 

But  what  sort  of  consequences  should  be  observed  ?  How  should 
the  consequences  be  calculated,  since  pleasures  are  incommen- 
surable ?     There  is  no  answer  to  these  questions^ — nothing  but  the 

'  Ibid.,  chap,  xiii;   Book  IV,  chap.  i.  ^  Ibid.,  chap.  iii.  5  Ibid.,  p.  469. 

^  Ibid.,  chap.  ii.  *  Ibid.,  p.  462.  *  Ibid.,  p.  472. 


6  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

bare  conviction  that  the  thing  can  be  done.  "  No  doubt  a  thought- 
ful and  well-instructed  Utilitarian  may  see  dimly  a  certain  way 
ahead."' 

And  so  the  study  of  Methods  of  Ethics  ends  as  it  began,  with  the 
unsupported  assumption  that  in  some  inexplicable  way  the  guidance 
of  human  conduct  toward  the  good  and  the  right  has  been  advanced 
by  the  decision  that  the  moral  consciousness  of  man  works  thus  and 
not  so.  The  task  is  begun  by  virtue  of  an  alleged  "general  agree- 
ment" that  conduct  is  determined  by  the  principles  in  terms  of 
which  moral  behavior  is  explained,  and  it  is  finished  with  "  no  doubt " 
that  a  man  well  instructed  in  the  "rational  benevolence"  theory  of 
utilitarianism  may  somehow  make  some  progress. 

At  the  very  end  of  the  book,  however,  there  is  a  section  which 
hints  very  strongly  at  the  course  which  ethics  has  followed  in  recent 
years.  By  what  methods  can  a  man  ascertain  the  particular  modi- 
fications of  positive  morality  which  it  would  be  practically  expedient 
to  attempt  to  introduce?  Empirical  hedonism,  says  Sidgwick, 
faulty  as  it  is,  seems  the  only  method — "at  least  until  the  science  of 
Sociology  shall  have  been  really  constructed. '  '^  To  be  sure  he  confesses 
later  that  even  the  development  of  the  social  sciences  will  not  solve 
the  problem  of  the  subordination  of  values — that  if  utilitarianism 
means  anything  such  a  problem  must  remain  a  hedonistic  calculus.-^ 
Of  course  it  was  hardly  to  be  expected  that  the  author  of  a  profound 
exposition  of  the  theory  of  utihty  should  see  that  the  problem  of 
the  relative  importance  of  values  is  no  less  a  social  problem  than 
that  of  the  recognition  of  new  and  more  complex  social  values.  Yet 
it  is  very  significant  that  Sidgwick  saw  already  that  the  ethics  of  the 
future  was  to  be  much  more  a  study  of  the  social  order  and  much  less 
an  examination  of  the  moral  life  of  the  individual. 

Ill 

When  the  introduction  to  Green's  Prolegomena  to  Ethics  is 
examined  for  vestiges  of  the  assumption  of  the  fruitfulness  of  a  dual 
methodology  in  ethics,  its  similarity  to  the  first  chapter  of  Methods 
of  Ethics  is  very  striking.     Green,  like  Sidgwick,  explicitly  recog- 

'  Sidgwick,  Methods  of  Ethics  (4th  ed.),  p.  469. 

» Ibid.,  p.  471.  ^  Ibid.,  p.  474. 


FUNCTION  AND  PROBLEMS  OF  ETHICAL  THEORY  7 

nizes  the  dual  task  which  has  been  traditionally  assigned  to  ethics. 
"It  has  generally  been  expected  of  a  moralist  that  he  should  explain 
not  only  how  men  do  act  (i.e.,  in  making  moral  judgments)  but 
how  they  should  act. '"  But  moral  philosophy  has  fallen  into  dis- 
repute because  it  has  had  "no  interest  for  the  imagination  and  no 
power  over  the  heart. "^  It  has  become  a  natural  science,  seeking 
to  explain  causally  the  facts  of  moral  life.^  But  in  so  far  as  ethical 
speculation  has  been  reduced  to  a  natural  science,  the  "practical  or 
preceptive"  part  of  ethics  has  become  obsolete.  Thus  utilitarian- 
ism, "instead  of  telling  men  of  a  greatest  sum  of  pleasures  which 
they  ought  to  seek,  and  which  by  acting  in  the  light  of  a  true  insight 
they  may  attain,  ....  will  rather  set  itself  to  show  how  the 
phraseology  of  'ought'  and  'ought  not,'  the  belief  in  a  good  attain- 
able by  all,  the  consciousness  of  something  that  should  be  though  it 
is  not,  may  according  to  this  philosophy  be  accounted  for.""*  Yet 
with  such  a  clear  insight  into  the  futility  of  one  analysis  of  moral 
consciousness,  Green  announces  his  intention  of  embarking  upon 
the  same  voyage,  though  in  a  different  ship.  The  Prolegomena 
is  to  be  a  metaphysical  analysis  of  the  fundamental  nature  of  the 
cosmos,  for  the  purpose  of  determining  whether  there  is  in  man's 
being  a  principle  which  "consists  in  the  consciousness  of  a  moral 
ideal  and  the  determination  of  human  action  thereby.  "^ 

A  complete  discussion  of  the  metaphysical  basis  of  Green's 
ethics  would  contribute  nothing  to  this  examination  of  the  assump- 
tion of  the  fruitfulness  of  such  a  study.  There  is,  in  the  individual 
consciousness,  a  reproduction  of  the  universal  and  eternal  con- 
sciousness, which  is  contemplated  by  the  individual  as  the  image 
of  his  own  perfection.  Virtue  is  the  devotion  of  the  moral  man  to 
the  realization  in  his  own  life  of  this  perfection,  which,  in  turn,  con- 
sists in  the  complete  dedication  of  human  endeavor  to  this  self- 
realization.^ 

This  statement  of  Green's  theory  is,  of  course,  a  piece  of  cyclical 
reasoning  of  small  diameter ;   little  moral  guidance  could  be  wrung 

'  T.  H.  Green,  Prolegomena  to  Ethics  (3d  ed.),  p.  9. 
'Ibid.,  p.  4.  ^ Ibid.,  p.  11. 

2  Ibid.,  pp.  4-10.  *  Ibid.,  p.  309. 

*  Ibid.,  pp.  9-10. 


8  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

from  such  an  ethics.  The  statement  may  be  unjust,  yet  Green  did 
not  actually  make  any  practical  deductions  from  his  ethics  which 
could  not  as  well  be  associated  with  this  resume.  Green  recog- 
nized that  he  was  in  difficulties'  and  set  himself  in  the  fourth 
book  to  the  specific  task  of  justifying  his  own  work. 

First  he  decided  that  in  the  consideration  of  what  ought  to  be 
done  only  motives  need  be  taken  account  of,  as  a  consideration  of 
motives  includes  a  consideration  of  effects.^  ''The  actions  which 
ought  to  be  done,  are  actions  expressive  of  a  good  will,  in  the  sense 
that  they  represent  a  character  of  which  the  dominant  interest  is 
in  conduct  contributory  to  the  perfection  of  mankind,  in  doing  that 
which  so  contributes  for  the  sake  of  doing  it."  Still  there  is  the 
problem,  still  recognized  by  Green,^  whether  an  inquiry  into  the 
motives  of  an  act  even  by  the  doer  himself  can  achieve  "either  truer 
views  of  what  ought  to  be  done,  or  a  better  disposition  to  do  it." 

As  a  matter  of  fact  Green  was  logically  consistent  enough  to  see 
that,  regardless  of  the  conscientiousness  with  which  a  man  examines 
his  own  motives,  "he  will  not  for  doing  so,  directly  at  any  rate,  be 
the  better  judge  of  what  he  should  do,  so  far  as  the  judgment  de- 
pends on  correct  information  or  inference  as  to  matters  of  fact,  or 
on  a  correct  analysis  of  circumstances.  But  a  man's  doubts  as  to 
his  own  conduct  may  be  of  a  kind  which  such  information  and 
analysis  are  principally  needed  to  resolve."''  But  he  attempted  to 
extricate  himself  from  this  difficulty  by  showing  that  "it  is  a  suffi- 
cient spring  for  the  endeavor  after  a  higher  goodness  that  I  should  be 
ashamed  of  my  selfishness,  indolence,  or  impatience,  without  being 
ashamed  also  of  my  ignorance  and  want  of  foresight."^ 

This  seems  rather  like  the  assertion  that  it  makes  no  difference 
whether  you  know  what  you  are  doing,  or  even  why  you  do  it,  so 
long  as  you  do  it  with  due  humility  and  with  good- will  to  all.  This 
is  not  a  very  fruitful  doctrine  in  a  society  like  ours.  Green  saw  that 
still  he  had  not  touched  the  practical  problem — ^and  so  had  not 
justified  the  assumption  on  the  basis  of  which  the  whole  task  was 
undertaken.     "It  remains  to  be  asked,"  he  says  at  the  end  of  the 

'  T.  H.  Green,  Prolegomena  to  Ethics  (3d  ed.),  pp.  313-14. 
'Ibid.,  pp.  291-92.  *Ibid.,  pp.  331  ff. 

3  Ibid.,  p.  323.  5  Ibid.,  p.  334. 


FUNCTION  AND  PROBLEMS  OF  ETHICAL  THEORY  g 

book,'  "by  what  rule  effort  is  to  be  guided,  which  we  suppose  the 
idea  of  a  possible  human  perfection  thus  to  initiate."  Unless  this 
problem  can  be  solved  "it  would  seem  that  our  theory  of  the  basis 
of  morality,  though  its  adoption  might  save  some  speculative  per- 
sons from  that  distrust  of  their  own  conscience  to  which  Hedonism 
would  naturally  lead  them,  can  be  of  no  further  practical  value. "^ 
And  in  the  end  Green  gave  the  game  away,  saving  himself  as 
best  he  could  by  the  reiteration  of  his  still  unjustified  assumption  in 
the  assertion  that  "we  all  recognize  virtues  which  carry  in  them- 
selves unfulfilled  possibilities,  "^  and  by  the  distinction,  which  served 
him  in  tight  places  several  times,  between  motives  and  effects. 
"  No  theory  whatever  of  the '  Summum  Bonum,'  Hedonistic  or  other, 
can  avail  for  the  settlement  of  (the  question  of  what  law  or  usage 
or  course  of  action  contributes  to  the  better-being  of  society)  which 
requires  analysis  of  facts  and  circumstances,  not  consideration  of 
ends.  But  it  (a  theory  such  as  this)  will  sufficiently  direct  us  in 
regard  to  the  kind  of  effects  we  should  look  for  in  our  analysis,  and 
to  the  value  we  should  put  upon  them  when  ascertained."''  How 
this  is  to  be  done  forms  no  part  of  theory,  yet  that  it  occurs  is  the 
justification  of  the  whole  philosophy.  The  book  ends,  as  it  began, 
with  the  assertion  that  moral  philosophy  is  the  source  of  moral 
wisdom  still  unsubstantiated  by  any  evidence  beyond  that  of 
traditional  acquiescence  in  convenient  dogma. 

IV 

Martineau,  always  rather  positive,  permitted  himself  a  much 
more  definite  exposition  of  moral  principles  than  either  Sidgwick  or 
Green  attempted,  and  for  this  reason  it  is  not  necessary  to  do  more 
than  recognize  the  fact  that  his  contribution  to  morality  obviously 
falls  short  of  being  what  he  meant  it  to  be. 

It  would  seem  as  though  a  thinker  who  believed  morality  to 
consist  in  "a  feeling  that  this  is  worthier  than  that,"  and  that  the 
exercise  of  this  feeling  "demands  no  reflective  introspection,  no 
ability  to  lay  the  finger  on  what  it  is  in  the  action  which  excites 
the  feeling,  or  even  to  ask  the  question  whether  it  be  the  motive  or 

'  Ibid.,  pp.  391-92.  3  Ibid.,  p.  394. 

» Ibid.,  pp.  392-93.  -•  Ibid.,  p.  395. 


lO  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

the  effect,'"  would  naturally  feel  little  necessity  for  providing  the 
world  with  a  book  on  ethics,  except  as  a  piece  of  scientific  descrip- 
tion. One  does  not  have  to  listen  long  to  the  tone  of  the  book, 
however,  to  realize  that  Martineau  also  labored  under  the  universal 
ethical  misapprehension  that  from  his  exposition  of  the  facts  of  the 
moral  choice  he  could  deduce  some  positive  contribution  to  morality. 

The  necessity  for  moral  guidance  becomes  evident  as  soon  as  he 
has  shown  that  conscience  does  not  work  the  same  in  all  cases, 
because  {mirahile  dictu!)  different  verdicts,  "though  apparently 
pronoimced  upon  the  same  act,  are  even  directed  upon  it  in  dissim- 
ilar and  even  in  opposite  relations."^  Martineau  therefore  sets 
about  the  task  of  stabilizing  the  work  of  conscience  by  providing  it 
with  a  set  of  principles  (through  a  himdred  and  thirty-six  pages)  ^ 
with  reference  to  which  the  rightness  and  wrongness  of  an  act  may 
surely  be  determined'' — after  first  chiding  Sidgwick,  Spencer,  and 
Stephen  for  not  having  had  the  mental  stamina  to  precede  him  in 
this  necessary  work. 

Martineau's  achievement,  however,  is  hardly  enough  to  justify 
the  conclusion  that  from  a  theory  of  the  nature  of  moraHty  a  mor- 
ality may  be  inferred.  Waiving  all  consideration  of  the  compati- 
bility of  the  authority  of  Martineau's  conscience  and  Martineau's 
principles,  a  glance  at  the  nature  of  the  principles  themselves  is 
sufficient  to  show  that  they  are  as  far  as  the  principle  of  self- 
realization  from  the  needs  of  any  actual  moral  situation.  Martineau 
did  not  realize  this,  as  Green  and  Sidgwick  did  of  their  generaliza- 
tions. He  produces  situation  after  situation,  solving  each  one  in 
imagination  without  the  least  difficulty.  Martineau's  conception  of 
a  moral  problem,  however,  does  more  credit  to  his  character  than 
to  his  mind ;  there  is  very  little  reality  either  to  the  difficulties  or 
to  their  solution,  to  the  modern  way  of  thinking. 

V 

In  spite  of  the  inadequacy  of  the  t>pes  of  ethical  theory  which 
have  just  been  criticized,  the  fair  historian  cannot  pass  lightly  over 
the  positive  contributions  of  Sidgwick,  Green,  and  Martineau.     It 

'  James  Martineau,  Types  of  Ethical  Theory  (3d  ed.),  II,  58. 

*  Ibid.,  p.  63.  3  Ibid.,  chaps,  v.  and  vi.  ■*  Ibid.,  p.  270. 


FUNCTION  AND  PROBLEMS  OF  ETHICAL  THEORY  ii 

can  hardly  be  expected  that  any  philosopher  will  solve  all  the 
problems  of  the  cosmos,  though  his  failure  to  do  so  must  be  pains- 
takingly noted  in  the  interest  of  future  progress.  Moreover,  the  un- 
examined postulate  which  has  been  shown  to  underlie  this  ethical 
work  was  inherited  from  many  generations  of  scholars,  and  perhaps 
it  was  not  to  be  expected  that  it  should  be  noted  and  its  fallacy 
exposed  in  a  period  such  as  the  Victorian;  for  while  Darwin's  work 
was  already  having  large  effects  in  all  fields  of  thought  in  the 
seventies  and  eighties,  still  the  evolutionary  attitude  had  not  become 
habitual  in  the  sense  in  which  it  is  now.  Furthermore,  though  the 
great  social  reconstructions  which  are  now  going  on  were  implicitly 
present  at  that  time,  the  traditional  "common-sense"  morality  of 
the  race  was  very  much  less  in  question  then  than  now.  These  two 
changes — the  recognition  of  the  wide  variations  through  various 
evolutionary  epochs  of  the  social  background  of  morality  and  the 
demands  made  by  modern  industrial  society  for  a  reconstruction 
of  conventional  morality — are  largely  responsible  for  the  growing 
recognition  of  the  inadequacy  of  the  older  type  of  ethical  theory. 

That  moral  conduct  is  social  conduct  is  no  new  idea.  It  is 
specifically  enunciated  by  Aristotle,  who  defines  ethics  as  a  "study 
of  man  in  his  relations  to  society."^  In  a  certain  sense  Aristotle 
may  be  said  to  have  been  in  possession  of  an  idea  of  which  Baldwin's 
principle  that  "all  rules  of  action  for  the  guidance  of  life  must  be 
of  possible  social  application,  even  though  in  their  origin  they  are 
announced  and  urged  by  individuals,"^  is  simply  one  expression. 
The  significant  thing,  however,  is  not  that  Baldwin  thus  restated 
the  Kantian  categorical  imperative  in  the  language  of  sociology,  but 
rather  that  the  importance  of  recognizing  the  social  nature  of  moral 
problems  was  very  much  emphasized  in  the  nineties,  notably  in  the 
six  hundred  pages  of  Baldwin's  Interpretations.   \ 

Furthermore,  it  is  one  thing  to  acknowledge  the  existence  of 
society  as  the  home  of  the  individual;  it  is  quite  another  thing  to 
maintain,  as  Sumner  was  doing,-'  that  society  constructs  the  indi- 
vidual.   The  serious  exposition  of  the  theory  that  "right"  means  only 

^  Aristotle,  Nicomachcan  Ethics:  I.  i.  2. 
*  Baldwin,  Social  and  Ethical  Interpretations  (3d  ed.),  p.  551. 
3  For  though  Folkways  was  not  published  until  1907,  Sumner  was  teaching  the 
doctrines  which  it  contained  very  much  earlier.     See  Folkways,  Preface. 


12  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

"compatible  with  the  existing  order  of  things,"'  and  that  "philoso- 
phy and  ethics  are  the  products  of  the  folkways,"^  really  represented 
a  new  attitude  toward  the  development  of  society  if  not  a  wholly 
new  conception. 

The  new  recognition  of  the  facts  of  social  life,  particularly  of 
the  significance  of  the  wide  discrepancies  between  the  moral  conduct 
of  different  peoples  in  different  periods  of  social  evolution,  was 
perhaps  a  less  potent  awakener  of  ethicists  from  their  dogmatic 
slumber  than  the  growth  of  the  modern  urban-industrial  society. 
Professor  Tufts  considers  this  the  chief  cause  of  the  reconstruction 
of  ethical  concepts.  If  we  ask  what  has  affected  most  intensely  the 
ethical  thought  of  the  period  we  must  find  an  answer,  not  in  science, 
but  in  the  economic,  political,  and  family  life.  The  changing 
conditions  of  business  and  industry,  the  shift  to  urban  life,  the 
consequent  changes  in  the  family,  the  demands  for  new  legislation, 
the  controversies  over  judicial  interpretations,  the  search  for  more 
effective  deahng  with  poverty,  vice,  and  crime,  last  of  all  the  issues 
of  nationalism  and  internationalism,  war  and  peace — these  and 
others  of  like  sort  have  stirred  men  from  easy  reflection.'' 

VI 

In  the  face  of  problems  such  as  these  it  would  seem  that  the  old 
subconscious  dogma  of  ethics,  the  supposition  that  what  men  need 
is  a  clearer  exposition  of  moral  phenomena,  must  atrophy  from 
very  disuse.  As  a  matter  of  fact,  however,  while  certain  men  re- 
solved the  premise  of  the  older  ethics  by  advocating  the  abandon- 
ment of  metaphysico-psychological  speculation  for  the  more  fruitful 
study  of  actual  affairs,  others  seized  the  opposite  horn  of  the  di- 
lemma and  proceeded  to  make  ethics  a  "natural  science."  The 
form  which  this  "natural"  ethics  typically  took  was  that  of  an 
attempt  to  account  for  the  phenomena  of  social  life  in  terms  of  a 
moral  instinct.  In  1887  Hoffding  had  made  a  careful  descriptive 
analysis  of  the  moral  organization  of  the  family,  the  state,  and  "die 
freie  Kulturgesellschaft,"  using  as  his  principles  of  explanation  a 

'  Sumner,  Folkways,  p.  28.  ^  Ibid.,  p.  38. 

3  J.  H.  Tufts,  "Ethics  in  tlie  Last  Twenty-five  Years, "  Philosophical  Review,  Jan- 
uary, 191 7. 


FUNCTION  AND  PROBLEMS  OF  ETHICAL  THEORY  13 

"Lust-  Oder  Unlustgefiihl "'  which,  "wenn  es  sich  auf  der  Grund- 
lage  der  S>Tnpathie  zum  Pflicht — und  Gerechtigkeitsgefiihl  ent- 
wickelt,  wird  das  in  diesem  Gesetz  ausgesprochene  Prinzip  zuletzt 
der  Massstab  der  gefallten  ethischen  Urtheile  sein,"^  and  a  concep- 
tion of  "Wohlfahrt"  as  "das  Prinzip  fiir  die  Feststellung  des 
Inhalts  der  Ethik  und  fur  die  Wertschatzung  der  menschHchen 
Handlungen."^ 

Hoffding,  however,  wrote  before  the  extension  of  the  evolution- 
ary principle  to  the  field  of  morals  had  been  consummated,  and  he 
therefore  did  not  attempt  to  make  his  explanation  include  the 
development  of  modern  out  of  primitive  morality.  This  task  was 
very  boldly  attacked  a  decade  later  in  Sutherland's  Origin  and 
Growth  of  the  Moral  Instinct.  Sutherland  attempted  to  trace  the 
origin  of  an  instinct  which,  emerging  from  the  parental  instinct 
of  the  lower  animals  in  the  form  of  sympathy,  had  "deepened  and 
expanded"  into  "the  moral  instinct  with  all  its  accompanying 
accessories,  the  sense  of  duty,  the  feeling  of  self-respect,  the  enthusi- 
asm of  both  the  tender  and  the  manly  ideal  of  ethic  beauty."'' 
With  Westermarck  this  moral  emotion  is  broadened  into  a  mere 
emotion  of  approval  and  disapproval,  which,  acting  spontaneously 
though  apparently  along  relatively  fixed  lines, ^  determines  the  forms 
which  moral  and  immoral  practices  assume  in  different  civilizations.^ 

While  the  work  which  has  been  accompHshed  by  this  type  of 
"scientific  ethics"  has  been  of  the  very  highest  scientific  value  for 
the  sympathetic  understanding  of  moralities  foreign  to  our  own,  yet, 
as  Green  pointed  out,  it  does  not  afford  any  basis  whatever  for  the 
formulation  of  a  positive  contribution  to  the  morahty  of  our  own 
day.  Hoffding  saw  this  clearly  enough.  "EssindzweiAufgabender 
wissenschaftlichen  Ethik  zu  unterscheiden,"  he  said.  "Dieselbe  ist 
teils  eine  historische,  teils  eine  philosophische  Wissenschaft.  Die 
historische  oder  vergleichende  Ethik  sucht  die  positive  Moralitat 

'  Harold  Hoffding,  Ethik  (German  translation),  p.  24. 
^/6/</.,  p.  35.  ^  Ibid.,  p.  ^6. 

■»  Sutherland,  Origin  and  Growth  of  the  Moral  Instinct,  p.  2. 

5  See,  for  instance,  the  famous  chapter  on  "Marriage,"  Westermarck,  Origin  and 
Development  of  Moral  Ideas,  chap.  xl. 
*  Ibid.,  chap.  ii. 


14  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

SO  darzustellen,  wie  sie  zu  einer  gegebnen  Zeit  bei  einem  gegebnen 
Volk  auftritt.  Die  philosophische  Ethik  hat  zur  Aufgabe  nicht  die 
Beschreibung  und  Erklarung  gegebner  ethischer  Erscheinungen, 
sondern  die  Wertschatzung  derselben."'  Westermarck  was  more 
consistent  and  denied  that  this  evaluation  of  current  moral  practices 
can  be  the  business  of  a  science.^  But  this  escape  is  purely  verbal; 
it  serves  to  make  a  clear  distinction  between  the  "natural  science" 
of  ethics  and  the  practical  problems  of  morality,  but  it  does  not 
explain  away  those  problems. 

Another  effort  to  develop  an  expository  ethics  without  even  an 
attempt  at  a  contribution  to  morality  is  that  of  the  rationalists. 
In  spite  of  Taylor's  cogent  and  vital  demonstration  that  "it  is  an 
insufficient  explanation  of  the  nature  and-  origin  of  moral  ideals  to 
say  that  they  spring  from  the  rational  character  of  human  agency," 
since  "in  order  to  know  what  kind  of  conduct  will  in  the  case  of  any 
individual  or  species  conform  to  our  principle  (of  economy,  i.e., 
"rationality")  by  securing  the  beneficial  reaction  at  the  least  cost, 
it  is  clearly  all-important  to  know  what  are  the  general  conditions 
of  existence  which  have  to  be  met  by  the  action  of  the  individual  or 
species  in  question,  "^  the  rationalist  type  of  ethical  speculation  has 
persisted. 

Why  it  persists  it  is  hard  to  say.  The  rationalists  cannot 
claim  to  have  made  any  such  contribution  to  knowledge  as  that  of 
the  "moral  instinct  evolutionists,"  nor  do  they  devote  themselves 
to  the  solution  of  practical  moral  problems.  Moore  admits  that 
"in  order  to  show  that  any  action  is  a  duty,  it  is  necessary  to  know 
both  what  are  the  other  conditions,  which  will,  conjointly  with  it, 
determine  its  effects;  to  know  exactly  what  will  be  the  effects  of 
these  conditions;  and  to  know  all  the  events  which  will  be  in  any 
way  affected  by  our  action  throughout  an  infinite  future,"  and  that 
failing  of  this  perfect  achievement  ethics  may  nevertheless  marshal 
the  alternatives  likely  to  occur  to  anyone  and  study  their  probable 
effects.'*    Yet  he  does  not  take  any  steps  in  the  direction  of  this  type 

»  Hoffding,  Ethik  (German  translation),  p.  7. 

*  Westermarck,  op.  cit.,  p.  18. 

3  A.  E.  Taylor,  Problem  of  Conduct,  p.  41. 

*  G.  E.  Moore,  Principia  Ethica,  p.  149. 


FUNCTION  AND  PROBLEMS  OF  ETHICAL  THEORY  15 

of  ethical  study,  contenting  himself  with  dogmatizing  about  the 
varieties  of  experience  which  are  "intrinsically"  good  and  evil.' 
And  Rashdall  seems  to  confess  that  ''if  a  Moral  Philosopher  be  a 
good  guide  in  practical  difficulties ,  it  will  be  rather  his  qualities  as 
a  man  (the  fact  that  'he  must  at  least  have  accustomed  himself  to 
consider  the  relation  of  means  to  ends,'  etc.^)  than  his  scientific 
training  that  will  make  his  opinion  valuable."^  This  amounts  to  a 
withdrawal  of  ethics  from  the  sciences  and  its  establishment  as  a 
discipline  contributory  to  the  mental  development  of  moralists. 
Thus  the  rationalists  as  well  as  the  evolutionists  resolve  the 
methodological  paradox  by  the  complete  sacrifice  of  the  practical 
phase  of  ethical  thinking. 

VII 

The  only  solution  of  the  difficulties  involved  in  the  dualism  of 
metaphysico-psychological  speculation  and  practical  morality  alter- 
nate to  the  abandonment  of  the  latter  lay  in  the  direction  of  the 
complete  subordination  of  the  speculative  phase  of  ethics  to  the 
problems  involved  in  the  quest  for  moral  guidance.  If  the  axiom 
that  from  the  analysis  of  moral  judgment  there  naturally  flows  a 
stream  of  moral  precepts  had  failed  in  practice,  that  failure  could 
hardly  be  said  to  involve  more  than  the  particular  types  of  moral 
analysis  which  had  thus  far  found  expression.  It  by  no  means 
followed  that  no  explanation  of  the  facts  of  moral  life  could  be  made 
which  would  give  the  slightest  impulse  to  the  solution  of  the  practi- 
cal moral  problems  of  society. 

It  was  quite  natural,  therefore,  that  there  should  develop  out  of 
this  methodological  crisis  a  new  conception  of  the  problems  of  ethics 
and  the  duties  of  the  ethicist,  which  should  involve  the  complete 
abandonment  of  the  attempt  to  explain  moral  life  as  due  to  some 
one  factor  of  the  human  personality,  and  should  adopt  instead  the 
notion  that  the  phenomenon  of  the  moral  regulation  of  life  is  a 
function  of  x  variables,  in  which  all  the  faculties  of  the  individual 
mind  and  all  the  relationships  which  constitute  society  have  a  part. 

This  conception  of  the  problems  of  ethics  was  forecast  in  1889  by 
Paulsen.     Accepting  the  view  that  it  is  the  function  of  ethics  "to 

'  Ibid.,  chap.  vi.      '  Rashdall,  The  Theory  of  Good  and  Evil,  II,  440.      ^  Ibid,,  p.  438. 


l6  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

show  how  human  life  as  such  must  be  fashioned  to  reahze  its  pur- 
pose or  end,'"  and  that  the  end  is  not  pleasure,  but  an  "objective 
content  of  Hfe,  or,  since  Hfe  consists  solely  of  action,  definite  concrete 
activities,"^  Paulsen  maintained  that  the  difference  between  good 
and  bad  is  the  difference  between  "the  effects  which  modes  of 
conduct  and  acts  of  will  naturally  produce  upon  the  life  of  the  agent 
and  his  surroundings,"^  and  that  morality  consists  not,  in  the  dis- 
covery of  some  great  moral  principle  around  which  conduct  can  be 
organized,  but  rather  in  "the  rational  organization  of  life."'*  In  the 
same  year  Alexander  published  The  Moral  Order  and  Progress,  in 
which  he  set  forth  a  variant  of  the  same  theory,  describing  the  moral 
order  as  an  equilibrium  of  the  moral  impulses  of  an  individual  and 
of  the  conduct  of  the  individual  in  society.^ 

These  formulations,  however,  have  the  disadvantage  of  being 
transitional;  they  do  not  cut  themselves  clearly  away  from  ethical 
tradition  and  consequently  they  do  not  fully  achieve  the  reconstruc- 
tion of  ethical  methodology.  That  reconstruction  has  come  with 
the  development  of  a  new  and  freshly  vital  mode  of  thinking.  It 
has  been  announced  most  clearly  by  the  Chicago  pragmatists, 
whose  statements  will  for  that  reason  be  adopted  in  this  exposition. 

In  1 89 1  Dewey  definitely  set  out  to  expose  the  undeclared 
assumption  which  underlay  the  ethical  speculation  of  the  past,  the 
axiom  "which  is  not  indeed  marshalled  in  open  array  upon  the 
battlefield,  but  about  whose  presence  there  can  be  no  doubt — 
the  idea  that  moral  theory  is  something  other  than,  or  something 
beyond,  an  analysis  of  conduct — the  idea  that  it  is  not  simply  and 
wholly  'the  theory  of  practise.'  Moral  theory,  for  example,  is 
often  regarded  as  an  attempt  to  find  a  philosophic  basis  or  founda- 
tion for  moral  activity  in  something  beyond  that  activity  itself."^ 
There  can  be  no  doubt,  Dewey  went  on  to  say,  that  there  is  no 
"intrinsic  connection"  between  moral  theory  of  this  sort  and  moral 
conduct.     "The  Golden  Rule  gives  me  absolutely  no  knowledge, 

'  Friedrich  Paulsen,  System  of  Ethics  (Thilly's  translation),  p.  i. 
» Ibid.,  p.  223.  ^Ibid.,  p.  222.  -•  Ihid.,  Book  III,  chap.  i. 

s  Alexander,  The  Moral  Order  and  Progress  (2d  ed.).  Book  II,  chap.  ii. 
*  John  Dewey,  "Moral  Theory  and  Practise,"  International  Journal  of  Ethics, 
1,187. 


FUNCTION  AND  PROBLEMS  OF  ETHICAL  THEORY  17 

of  itself,  what  I  should  do.'"  Of  what  use,  then,  is  this  type  of 
theory  ?  Of  great  use,  since  it  supphes  the  instruments  of  analysis.^ 
Philosophical  theories  play  the  part  of  instrument-makers,  supply- 
ing us  with  new  instruments  of  thought  whenever  the  old  become 
worn  out.     But 

it  is  a  piece  of  scholasticism  to  suppose  that  a  moral  rule  has  its  own  self- 
defining  and  self-applying  content.  What  truth-telling,  what  honesty,  what 
patience,  what  self-respect  are  changed  with  every  change  of  intelligence,  with 
every  added  insight  into  the  relations  of  men  and  of  things.  It  is  only  the 
breath  of  intelligence  blowing  through  such  rules  that  keeps  them  from  the 
putrefaction  which  awaits  all  barren  idealities.^ 

Moral  theory,  as  Dewey  conceives  it,  is  just  this  breath  of 
intelligence. 

What,  then,  is  moral  theory  ?     It  is  all  one  with  moral  insight,  and  moral 

insight  is  the  recognition  of  the  relationships  in  hand It  is  the  analytic 

perception  of  the  conditions  and  relations  in  hand  in  a  given  act — it  is  the  action 
in  the  idea.     It  is  the  construction  of  the  act  in  thought  against  its  outward      "~1 
construction.     It  is,  therefore,  the  doing — the  act  itself,  in  its  emerging.     So 
far  are  we  from  any  divorce  of  moral  theory  and  practise  that  theory  is  the 
ideal  act,  and  conduct  is  the  executed  insight.'' 

As  early  as  1891,  then,  the  definition  of  the  problems  of  specu- 
lative ethics  was  being  based  upon  the  demands  of  the  practical 
moral  situation.  It  still  remained,  however,  to  make  more  ex- 
plicit the  conceptions  of  ethical  methodology  which  had  been  thus 
enunciated.  A  decade  after  the  writing  of  the  paper  to  which 
reference  has  just  been  made  Dewey  recast  the  problems  of  ethics 
in  terms  of  the  historical  method.  After  showing  that  "the  histori- 
cal method  brings  under  intellectual  and  practical  control  facts 
which  utterly  resist  general  speculation  or  mere  introspective 
observation, "5  he  went  on  to  explain  that  the  historical  method 
demonstrates  the  continuity  of  moral  experience  and  provides  the 
means  for  controlling  that  experience. 

'  Ibid.,  p.  194.  ^  Ibid.,  p.  196. 

'Ibid.,p.  igs.      ^  ^  Ibid.,  p.  iSS. 

s  Dewey,  "The  Evolutionary  Method  as  Applied  to  Morality,"  Philosophical 
Review,  XI,  No.  2,  113. 


1 8  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

Its  assumptions  are  that  norms  and  ideals,  as  well  as  unreflective  customs, 
arose  out  of  certain  situations,  in  response  to  the  demands  of  those  situations; 
and  that  once  in  existence  they  operated  with  a  less  or  greater  meed  of  success 
(to  be  determined  by  the  study  of  the  concrete  case).  We  are  still  engaged  in 
forming  norms,  in  setting  up  ends,  in  conceiving  obligations.' 

To  help  us  see  the  present  situation  comprehensively,  analytically,  to  put 
in  our  hands  a  grasp  of  the  factors  that  have  counted,  this  way  or  that,  in  the 
moralizing  of  man,  that  is  what  the  historical  method  does  for  us.  Moral 
judgments  are  judgments  of  ways  to  act,  of  deeds  to  do,  of  habits  to  form, 
of  ends  to  cultivate.  Whatever  modifies  the  judgment,  the  conviction,  the 
interpretation,  the  criterion,  modifies  conduct.  To  control  our  judgments  of 
conduct,  our  estimates  of  habit,  deed,  and  purpose,  is  in  so  far  forth  to  direct 
conduct  itself.^ 

The  historical  method,  however,  does  not  define  the  field  of 
ethical  inquiry.  That  field  cannot  be  accurately  defined  in  terms 
of  any  method  of  ethics;  or  rather  it  cannot  be  bounded  by  any 
special  method  which  hypostatizes  itself  into  an  ''ethical  principle" 
and  proceeds  to  define  ethics  as  the  exercise  of  that  principle. 
It  is  the  very  essence  of  this  interpretation  of  the  problems  of  ethics 
that  this  is  not  such  a  special  principle  of  explanation,  but  is  a 
theory  that  the  facts  of  moral  conduct  can  only  be  understood  when 
all  the  aspects  of  every  moral  situation  enter  into  the  explanation 
as  equally  relevant.  The  field  of  ethics,  then,  is  the  whole  moral 
situation.  If  we  are  to  construct  an  ethics  which  shall  cover  that 
field, 

we  need  to  know  what  the  social  situation  is  in  which  we  find  ourselves  re- 
quired to  act,  so  that  we  may  know  what  it  is  right  to  do.  We  need  to  know 
what  is  the  effect  of  some  psychical  disposition  upon  our  way  of  looking  at  life 
and  thereby  upon  our  conduct.  Through  clearing  up  the  social  situation, 
through  making  objective  to  ourselves  our  own  motives  and  their  consequences, 
we  build  up  generic  propositions:  statements  of  experience  as  a  connection  of 
conditions,  that  is,  in  the  form  of  objects.  Such  statements  are  used  and  ap- 
plied in  deaUng  with  further  problems.  Gradually  their  use  becomes  more  and 
more  habitual.  The  "theory"  becomes  a  part  of  our  psychical  apparatus. 
The  social  situation  takes  on  a  certain  form  of  organization.  It  is  pre-classified 
as  of  a  certain  sort,  as  of  a  certain  genus,  and  even  species  of  this  sort; 
the  only  question  which  remains  is  discrimination  of  the  peculiar  variety. 

»  Dewey,   "The  Evolutionary  Method  as  Applied  to  Morality,"  Philosophical 
Review,  XI,  No.  4,  p.  356. 
^Ibid.,  p.  371. 


FUNCTION  AND  PROBLEMS  OF  ETHICAL  THEORY  19 

Again,  we  get  into  the  habit  of  taking  into  account  certain  sources  of  error  in 
our  own  disposition  as  these  aflfect  our  judgments  of  behavior,  and  thereby 
bring  them  sufficiently  under  control  so  that  the  need  of  conscious  reference  to 
their  intellectual  formulation  diminishes.  As  physical  science  has  brought 
about  an  organization  of  the  physical  world  along  with  an  organization  of  the 
practical  habits  of  dealing  with  that  world,  so  ethical  science  will  effect  an 
organization  of  the  social  world  and  a  corresponding  organization  of  the  psy- 
chical habits  through  which  the  individual  relates  himself  to  it.  With  this 
clearing  up  of  the  field  and  organs  of  moral  action,  conscious  recourse  to 
theory  will,  as  in  physical  cases,  limit  itself  to  problems  of  unusual  perplexity 
and  to  constructions  of  a  large  degree  of  novelty.' 

This  statement  of  Dewey's  practically  identifies  the  field  of 
ethical  speculation  with  that  of  the  specific  moral  problem.  Ac- 
cording to  this  view  ethics  is  not  an  abstract  speculative  science, 
engaged  in  establishing  "laws"  definitive  of  moral  judgment.  It 
is  rather  the  scientific  treatment  of  moral  problems.  Ethics 
attempts  to  carry  out  on  a  larger  scientific  scale  just  those  thought- 
processes  which  precede  a  moral  decision  in  the  mind  of  a  wise 
man,  a  man  who  would  understand  what  he  is  doing  before  he 
does  it.  It  seeks  to  understand  the  significance  of  the  forces  of 
social  convention  and  of  individual  character — impulse  and  habit — 
which  sway  the  judgment  this  way  and  that,  and  the  larger  meaning 
of  the  issues  at  stake  in  the  social  situation.  And  the  goal  of  such 
a  scientific  study  of  all  the  discoverable  phases  of  a  moral  problem 
is  not  the  creation  of  psychological  generalizations,  but  rather  the 
wiser  and  more  scientific  solution  of  the  specific  moral  problem  by 
the  clear  exposition  of  its  innermost  meaning. 

This  exposition,  as  Dewey  has  demonstrated,  is  greatly  facili- 
tated by  the  employment  of  the  historical  method.  One  can 
hardly  understand  the  full  significance  of  the  social  conventions 
which  play  so  large  a  part  in  every  moral  situation  without  some 
knowledge  of  the  manner  in  which  those  conventions  have  come  to 
be  what  they  are.  This  particular  historical  task  has  been  under- 
taken by  the  sociologists,  who,  nevertheless,  have  shown  some 
tendency  to  content  themselves  with  giving  descriptions  of  the 
different  codes  which  have  obtained  at  different  periods  among 

'  John  Dewey,  Logical  Conditions  of  a  Scientific  Treatment  of  Morality  (Decennial 
Publications  of  the  University  of  Chicago),  p.  26. 


20  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

different  peoples  without  correlating  them  and  exposing  the  con- 
tinuity of  their  development,  or  if  they  have  attempted  to  see  the 
continuity  of  social  forms  they  have  done  so  at  the  sacrifice  of  a 
clear  vision  of  the  unity  of  development  of  all  the  various  institu- 
tions which  together  constitute  the  social  order.  The  former 
criticism  is,  perhaps,  premature,  as  the  research  into  specific  civili- 
zations must  necessarily  precede  the  attempt  to  construct  the  re- 
sults of  such  studies  into  the  genetic  form  and  the  recognition  of 
the  continuity  of  their  development.  Hobhouse,  for  example,  has 
done  as  much  as  anyone  along  the  line  of  tracing  "the  evolution  of 
the  ethical  consciousness  as  displayed  in  the  habits  and  customs, 
rules  and  principles,  which  have  arisen  in  the  course  of  human 
history  for  the  regulation  of  human  conduct.'"  But.  though  Hob- 
house  has  organized  a  mass  of  material  in  such  a  way  as  to  indi- 
cate that  moral  codes  do  grow  from  one  another  in  a  continuous 
progression,  he  has  done  little  more  than  allege  the  unity  of  the 
developmental  process,  even  in  the  third  edition.  Furthermore  his 
characterization  of  that  process  is  rather  too  external  to  suggest 
very  clearly  what  the  impelling  forces  behind  the  process  are.  On 
the  other  hand,  Professor  Tufts,  although  he  has  made  no  such 
extended  research  into  the  actual  history  of  morality  but  has  cen- 
tered his  attention  upon  the  attempt  to  understand  the  nature  of 
the  evolutionary  process  in  the  field  of  morals,  has  made  an 
extremely  important  suggestion  for  the  interpretation  of  moral 
development. 

Assuming  the  notion,  of  which  he  had  been  an  early  exponent, 
that  mind  is  something  which  is  developed  in  the  course  of  societal 
evolution,  he  has  gone  further  and  described  moral  evolution  as  a 
process  in  which  the  moral  faculty  is  sharpened  by  a  growing 
social  order,  while  at  the  same  time  the  social  structure  is  built  up 
by  the  exercise  of  a  developing  moral  consciousness.  But  the 
most  significant  feature  of  Professor  Tufts's  statement  of  the 
nature  of  the  development  of  morahty  is  his  full  recognition  that 
the  gradual  moralization  of  society  through  the  evolution  of  social 
conventions  is  but  one  aspect  of  a  process  which  includes  as  its 
other  phase  the  development  of  the  moral  character  of  the  individ- 

'  L.  T.  Hobhouse,  Morals  in  Evolution  (3d  ed.),  p.  i. 


FUNCTION  AND  PROBLEMS  OF  ETHICAL  THEORY  21 

uals  who  compose  society.  Ethics  deals  with  both  the  aspects  of 
life  and  conduct.  "It  has  to  study  the  inner  process  as  determined 
by  the  outer  conditions  or  as  changing  these  outer  conditions,  and 
the  outward  behavior  or  institution  as  determined  by  the  inner 
purpose,  or  as  affecting  the  inner  hfe."' 

When,  therefore.  Professor  Tufts  describes  the  evolution  of 
morality  as  a  rationalizing  and  socializing  process,  he  refers  to  the 
development  both  of  social  institutions  and  of  individual  character. 
Thus  the  "rationalizing  process"  means  the  greater  use  of  inteUi- 
gence,  caused  by  the  exigencies  of  the  satisfaction  of  primitive 
wants.  At  the  same  time  this  rationalization  is  reflected  back  upon 
the  objective  situation  in  the  creation  of  new  institutions  and  the 
attendant  higher  organization  of  group  life.  So  with  socialization : 
associations  formed  originally  as  a  result  of  fundamental  instinctive 
needs  have  their  effects  upon  the  human  animal,  making  him  more 
dependent  on  a  group  and  more  fond  of  social  life.  These  changes 
in  the  character  of  the  individual  find  equivalent  expression  in  the 
growing  complexity  of  the  social  structure.  The  building  up  of  a 
socially  self-conscious  individual  and  the  building  up  of  a  complex 
social  group  are  phases  of  the  same  process.^ 

VIII 

This  conception  of  the  function  of  ethical  theory  is  more  than 
a  mere  eclecticism.  If  it  were  no  more  than  that — if  it  only  sub- 
stituted for  the  moral  theories  which  lay  particular  stress  upon 
various  features  of  the  moral  life  a  sort  of  theoretical  compromise 
in  which  all  those  features  were  included  without  any  selective 
emphasis — then  the  charge  might  be  justly  made  that  it  is  as  barren 
of  practical  consequences  as  any  of  the  systems  which  it  seeks  to 
supplant.  But  such  a  charge  could  be  brought  only  if  it  could  be 
shown  clearly  that  this  ethical  theory,  relying  upon  the  old  assump- 
tion that  principles  for  moral  guidance  spring  naturally  from  the 
correct  imderstanding  of  the  moral  judgment,  rests  its  oars  as  soon 
as  it  has  formulated  its  conception  of  moral  Hfe  and  evolution. 

'  Dewey  and  Tufts,  Ethics,  p.  3.  See  also  John  Dewey,  Logical  Conditions  of  a 
Scientific  Treatment  of  Morality  (Decennial  Publications  of  the  University  of  Chicago), 
pp.  16-17. 

'  Dewey  and  Tufts,  op.  cit.,  Part  I. 


22  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

But  it  would  be  difficult  to  make  such  a  demonstration,  for 
such  a  cessation  of  effort  would  be  in  fiat  contradiction  to  this 
notion  of  the  function  and  problems  of  ethical  theory.  The  prin- 
cipal point  of  difference  between  this  and  the  traditional  meta- 
physical and  psychological  theories  is  found  just  at  this  point. 
The  traditional  ethical  doctrines  essayed  the  analysis  of  the  moral 
judgment  in  the  vague  hope  of  discovering  the  "true"  principle  of 
moral  conduct,  assuming  that  a  knowledge  of  that  principle  could 
somehow  be  applied  to  the  solution  of  practical  moral  problems. 
This  doctrine,  on  the  contrary,  maintains  that  the  analysis  of  moral 
consciousness  yields  no  such  principle,  by  the  mechanical  appli- 
cation of  which  one  can  determine  offhand  what  is  right  and  good. 
It  rests  upon  the  conviction  that  any  moral  ideal  which  is  deduced 
as  an  a  priori  formula  from  such  metaphysical  or  psychological 
speculation  is  no  ideal  at  all  but  only  a  conglomeration  of  words, 
until  it  has  been  given  specific  meaning  in  a  long  series  of  actual 
moral  decisions,  each  of  which  determines  whether  some  particular 
act  or  policy  is  contained  in  that  ideal  or  not.  It  asserts  that  if 
ethical  speculation  is  to  establish  any  really  vital  connection  with 
the  problems  of  living,  which  are  universally  admitted  to  be,  after  all, 
the  fundamental  ethical  problems,  it  must  take  up  into  itself  that 
specific  and  particular  sort  of  moral  speculation  which  precedes 
such  actual  moral  decisions;  for  it  is  those  decisions  which  de- 
termine what  we  think  right,  when  all  is  said,  and  not  our  belief 
in  great-8st  happiness  principles  or  categorical  imperatives. 

Ethics  can  never  hope  to  supplant  the  individual  decision;  its 
one  claim  to  scientific  standing  must  therefore  depend  upon  its 
ability  to  contribute  to  moral  progress  by  making  individual  moral 
problems  its  business.  It  must  study  the  moral  consciousness  and 
moral  evolution,  not  as  ends  in  themselves,  but  only  that  as  a 
result  of  such  studies  it  may  say  with  somewhat  more  wisdom  than 
is  the  meed  of  the  common  man  whether  particular,  immediately 
contemplated  acts  and  policies  are  right  or  not.  Consequently  it 
must  take  into  consideration  not  only  motives  and  impulses,  the 
good-will,  the  moral  sense,  and  the  balanced  reason,  but  also  the 
whole  objective  setting  and  significance  of  the  acts  themselves. 
Its  business  is  not  only  with  faculties  but  with  institutions;  it 


FUNCTION  AND  PROBLEMS  OF  ETHICAL  THEORY  23 

deals  not  only  with  men  but  with  events.  It  must  achieve  its 
results  not  by  some  metaphysical  legerdemain  but  by  the  plain 
hard  work  of  mastering  the  essential  facts. 

It  is  clear  that  such  work  involves  the  concentration  upon  the 
solution  of  moral  difficulties  of  the  results  of  all  the  other  sciences. 
Physics  and  chemistry  and  geology  niust  contribute  to  an  under- 
standing of  the  physical  alternatives  presented  in  the  moral  situa- 
tion and  to  a  comprehension  of  the  actual  results  of  choices  that 
have  been  made.  It  is  for  the  biological  sciences  to  contribute  to  a 
clear  apprehension  of  the  implications  involved  in  the  preference 
and  accomplishment  of  "life  as  a  biological  process."  And  the 
social  sciences  should  illuminate  the  social  structure  so  that  the 
ethicist  may  see  the  influence  of  the  social  order  in  the  individual 
moral  process  and  the  incidence  of  the  effects  of  the  individual 
moral  choice  upon  other  men  through  the  medium  of  social  readjust- 
ment. 

Out  of  this  concrete  study  of  as  many  of  the  aspects  of  human 
life  as  can  be  brought  under  scientific  observation  the  ethicist  draws 
his  conclusions  with  regard  to  a  host  of  disputed  moral  problems. 
And  from  those  conclusions  he  creates,  if  he  can,  a  practical  and 
personal  ideal — not  deduced  by  some  transcendental  logic  from  the 
psychology  or  metaphysics  of  the  moral  judgment,  but  constructed 
out  of  the  materials  of  the  accumulated  moral  experience  of  the 
race. 


CHAPTER  II 
THE  FUNCTION  AND  PROBLEMS  OF  ECONOMIC  THEORY 


The  discussion  now  current  among  economists  over  the  immedi- 
acy of  the  relation  of  economics  to  social  reform  has  been  precipi- 
tated by  the  fact  that  while  the  marginal  variants  of  orthodox 
theory  have  been  subjected  to  more  and  more  searching  criticism 
of  late  years,  definite  attempts  have  at  the  same  time  been  made  in 
this  country  and  in  England  to  reconstruct  economic  theory  upon  a 
wholly  different  set  of  basic  assumptions  than  the  ones  which 
underlie  the  classical  doctrines.  It  is  natural,  therefore,  that  the 
difference  of  opinion  upon  the  function  of  economic  science,  which  is 
a  by-product  of  this  movement  away  from  orthodox  theory,  should 
be  extremely  wide. 

It  is  limited  on  one  side  by  such  writers  as  J.  B.  Clark,  who  con- 
siders the  business  of  political  economy  to  be  the  examination  of 
facts,  the  exposition  of  movements  and  tendencies,  and  the  formula- 
tion of  laws.'  At  the  other  extreme  stand  men  like  Hobson,  whose 
work  constitutes  an  attempt  ''to  reduce  the  'social  reform'  move- 
ment to  a  definite  theoretical  statement."^  Between  these  two 
extremes  there  is  a  great  variety  of  opinions.  For  example,  Daven- 
port states  definitely  that  the  economist  must  stick  close  to  the  facts, 
sedulously  avoiding  any  expression  of  moral  approbation  or  con- 
demnation, and  he  adheres  to  this  definition  of  the  business  of 
economics  through  the  bulk  of  his  Economics  of  Enterprise.  But 
the  violence  of  the  castigation  which  he  lets  loose  upon  the 
existing  order  of  economic  arrangements  in  his  final  chapter 
suggests  that  he  has  withheld  his  criticism  throughout  the  book 
only  to  store  up  ammunition  for  an  annihilating  barrage  fire  at  the 

'  J.  B.  Clark,  Essentials  of  Economic  Theory,  Preface. 

^  W.  H.  Hamilton,  "Economic  Theory  and  'Social  Reform,'"  Journal  of  Political 
Economy,  XXIII,  563. 

24 


FUNCTION  AND  PROBLEMS  OF  ECONOMIC  THEORY  25 

end.'  Another  interesting  illustration  is  the  view  of  Thorstein 
Veblen,  who  has  a  way  of  announcing  in  occasional  footnotes  (doubt- 
less with  his  tongue  in  his  cheek)  that  he  is  engaged  only  in  describ- 
ing economic  phenomena  as  accurately  as  may  be,  and  that  if  the 
categories  which  he  is  forced  to  use  "carry  an  undertone  of  depre- 
ciation as  used  in  the  speech  of  everyday  life,"  it  is  only  an  unfortu- 
nate accident.  Those  categories,  he  insists,  with  the  utmost  possible 
sarcasm,  are  employed  only  "for  want  of  better  terms  that  will 
adequately  describe  the  same  range  of  motives  and  of  phenomena," 
and  "are  not  to  be  taken  in  an  odious  sense. "^ 

It  is  not  the  purpose  of  this  chapter,  however,  to  appraise  the 
arguments  of  such  disputants  as  those  whose  opinions  have  just 
been  cited.  In  the  heat  of  the  controversy  over  the  function  of  the 
science  of  political  economy  the  exponents  of  the  "descriptive" 
theory  of  economics  quite  commonly  refer  to  the  past  history  of 
the  science  as  though  it  constituted  a  complete  justification  for  their 
insistence  and  a  complete  proof  of  all  their  arguments.  They  feel 
that  the  poHtical  economy  of  the  century  following  the  publication 
of  the  Wealth  of  Nations  "sought  to  obtain  laws  which  fixed  the 
'natural'  prices  of  goods  and  those  which  in  a  like  way  governed  the 
natural  wages  of  labor  and  the  interest  on  capital."^  It  was,  accord- 
ing to  this  view,  a  pure  science.  As  the  standard-bearers  of  the  pure 
science  of  economics,  therefore,  they  naturally  feel  that  their  argu- 
ments are  peculiarly  sound  as  against  those  of  the  men  who  are 
so  patently  innovators  and  iconoclasts.  The  crux  of  the  whole  con- 
troversy seems,  therefore,  to  be  this  common  belief  of  the  orthodox 
theorist  that  his  position  has  the  special  sanction  of  history.  But 
this  common-sense  interpretation  of  the  part  played  by  economic 
science  in  the  past  has  little  more  of  validity  about  it  than 
most  of  our  accepted  beliefs.  At  all  events  I  shall  attempt  to 
outline  in  this  chapter  another  theory  of  the  history  of  political 
economy  than  the  one  generally  held,  and  I  shall  try  to  show  that, 
seen  in  the  light  of  this  theory,  the  recent  developments  in  econom- 
ics indicate  that  the  science  is  returning  to  its  proper  and  normal 
function  rather  than  departing  from  it. 

'  Davenport,  Economics  of  Enterprise,  pp.  29,  30,  and  the  final  chapter. 

^  Veblen,  Theory  of  the  Leisure  Class,  p.  97  (footnote  on  "Waste"). 

3  J.  B.  Clark,  op.  ciL,  Preface,  p.  v. 


26  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

Obviously  it  would  be  absurd  to  attempt  to  "prove"  anything 
in  so  short  a  paper  about  so  vast  a  subject  as  the  history  of  a  science 
— particularly  if  the  historical  study  is  pursued,  not  as  an  end  in 
itself,  but  for  the  light  which  it  will  throw  on  the  function  and  the 
problems  of  the  science.  The  interpretation  of  the  history  of 
economic  theory  which  I  desire  to  suggest  here  could  not  by  any 
stretch  of  the  imagination  be  regarded  as  established  until  all  the 
available  literature  of  the  subject  had  been  rehearsed.  Further- 
more, this  is  a  theory  that  economic  thought  proceeds  through  the 
successive  phases  of  a  cycle  which  may  reasonably  be  expected  to 
repeat  itself,  though  but  one  such  cycle  is  followed  through  by 
way  of  illustration.  Therefore  one  could  hardly  suppose  the 
theory  to  be  very  thoroughly  demonstrated  until  it  has  been  verified 
by  future  developments. 

Instead  of  marshalling  the  historical  data  and  making  a  great 
show  of  deducing  the  interpretation  from  them  by  some  inexorable 
logic,  I  shall  simply  describe  in  general  terms  the  different  phases 
through  which  economic  theory  appears  to  me  to  pass,  leaving 
the  reader  to  verify  or  refute  the  theory  by  use  of  the  historical 
facts  at  his  command.  For  the  sake  of  clarity,  however,  I  shall 
attempt  to  illustrate  each  successive  phase  with  a  few  selected 
references  to  some  of  the  more  interesting  features  of  the  develop- 
ment of  economic  theory  through  the  last  century  and  a  half.  So 
far  as  is  possible  these  illustrations  will  be  drawn  from  what  appears 
to  be  the  main  current  of  economic  thought.  Some  of  the  tribu- 
taries to  that  main  current— such  as  those  of  St.  Simon,  Sismondi, 
and  Marx — are  of  great  interest  and  considerable  importance  in 
relation  to  this  view  of  the  history  of  political  economy.  Yet  it 
has  seemed  wiser  to  avoid  all  complications  for  the  sake  of  the 
clearest  possible  exposition  as  well  as  for  the  sake  of  brevity. 

II 

There  are  several  peculiarities  of  the  history  of  economic  thought 
in  the  nineteenth  century  which  suggest  that  it  is  the  nature  of 
economic  theory  to  be  alternately  revolutionary  and  reactionary — 
now  bitterly  criticizing  and  now  placidly  accepting  the  existing 
organization  of  society.     This  process  can  be  described  best  as  a 


FUNCTION  AND  PROBLEMS  OF  ECONOMIC  THEORY  27 

great  cycle  involving  four  phases — criticism,  reconstruction,  appro- 
bation, and  renewed  criticism.  We  appear  just  now  to  be  nearing 
the  completion  of  such  a  cycle. 

A  social  crisis  arises  as  a  result  of  the  long  continuance  of 
institutions  which  do  obvious  violence  to  justice  and  equality. 
But  those  institutions  have  behind  them  two  powerful  forces — 
traditional  economic  doctrine  and  vested  pecuniary  interests; 
and  therefore  they  cannot  be  overturned  until  a  theory  of  social 
reform  has  been  promulgated  in  sufficiently  complete  and  logical 
form  to  expose  the  fallacies  and  the  sinister  backing  of  the  offending 
social  organization  and  to  offer  an  alternative  in  which  the  specific 
wrongs  will  be  righted.' 

But  in  order  to  achieve  such  a  victory  the  economist  must 
perforce  construct  a  logical  edifice  of  the  most  enduring  sort,  founded 
upon  the  rock  of  ages.  During  the  period  of  readjustment  follow- 
ing the  consummation  of  the  given  reforms,  therefore,  two  perfectly 
inevitable  things  occur.  The  very  perfection  of  the  logical  instru- 
ments which  were  devised  for  the  overturning  of  the  old  order 
causes  them  to  be  preserved  for  themselves,  as  though  they  had  a 
certain  inherent  value,  or  as  though  their  success  in  one  battle 
insured  their  eternal  invincibility.  One  school  succeeds  another; 
pitched  battles  rage  between  the  left  wing  and  the  right  over 
infinitesimal  differences  in  the  interpretation  of  the  terminology, 
while  the  main  body  of  doctrine  is  laid  away  for  permanent  preserva- 
tion in  the  safety-deposit  vault  of  an  undeclared  assumption. 

And  while  all  this  is  going  on  in  the  field  of  theory,  sinister 
forces  which  have  but  recently  been  expelled  from  one  sinecure  are 
readjusting  themselves  to  their  new  institutional  environment. 
Probably  no  one  supposes  today  that  it  is  humanly  possible  to 
construct  a  social  order  in  which  there  will  be  no  flaw.  The  social 
reform  which  deals  effectively  with  one  institutional  defect  can 
hardly  avoid  leaving  others.  A  Standard  Oil  magnate  who  died 
recently  is  reputed  to  have  defied  the  country  to  devise  anti- 
monopolistic  legislation  faster  than  the  great  trusts  can  find  other 
ways  of  exercising  the  same  monopolistic  powers.     It  is  inevitable, 

'Cf.  Hamilton's  "The  Price-System  and  Social  Policy,"  Journal  of  Political 
Economy,  XXVI,  31. 


28  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

therefore,  that  under  the  new  order  of  things  which  ensues  after  a 
period  of  social  reform  great  financial  forces  will  grow  up  which  owe 
their  then  form  and  size  to  the  reorganized  social  system,  and  will 
hence  be  ready  to  fight  for  its  perpetuation.  Thus  in  the  natural 
course  of  events  economic  theory  becomes  aligned  with  "those 
who  live  by  profit." 

At  the  same  time,  however,  economic  doctrine  is  by  no  means 
wholly  divorced  from  the  actual  problems  of  the  industrial  world. 
During  the  entire  period  of  acquiescence  which  succeeds  the 
formulation — for  purposes  of  fundamental  reform — of  a  polemical 
doctrine  there  still  remains  the  task  of  extending  the  reform  move- 
ment to  every  cranny  of  the  vast  social  edifice.  Thus,  while  the 
development  of  economic  doctrines  is  almost  wholly  confined  to 
the  super-refining  of  a  body  of  principles  which  is  for  the  most  part 
already  given,  the  reforms  which  called  forth  the  main  outlines  of  the 
economic  theory  are  carried  on  by  the  economists  with  undiminished 
zeal.  But  as  the  sinister  forces  against  which  the  original  attack 
was  directed  shift  their  front  to  accommodate  themselves  to  the 
new  social  technique,  the  continuance  of  the  same  old  instruments 
becomes  less  and  less  relevant.  The  weapon  which  drove  vested 
interest  out  of  its  fortifications  into  a  new  type  of  intrenchment  is  a 
less  and  less  effective  instrument  of  social  reform  as  the  change  in 
the  technique  of  defense  becomes  more  and  more  complete. 

Economists  are  never  wholly  unaware  of  the  obsolescence  of 
their  methods;  but  for  a  considerable  period  they  meet  the  novel 
and  unorthodox  defense  of  their  enemies,  the  foes  to  social  justice, 
with  unorganized  attacks.  While  continuing  to  exert  the  strongest 
possible  pressure  upon  what  they  still  conceive  to  be  the  enemy's 
principal  position — those  institutions  which  were  the  subjects  of  the 
original  attack — they  send  out  an  informal  skirmishing  line  to 
harass  his  new  operations.  Thus,  as  it  becomes  apparent  that 
protected  privilege  has  not  disappeared  in  spite  of  social  reform, 
the  economist,  while  holding  to  the  body  of  doctrine  which  was  a 
by-product  of  one  frontal  attack  upon  vested  interests,  naturally 
begins  to  throw  out  suggestions  of  possible  ways  of  meeting  the 
new  difficulties  without  another  cataclysmic  change  involving  the 
formulation  of  a  new  doctrine — suggestions  for  readjustments  that 


FUNCTION  AND  PROBLEMS  OF  ECONOMIC  THEORY  29 

will  be  external  to  the  economy  of  his  creed.  And  as  the  need  for 
further  reform  becomes  more  and  more  acute,  and  the  doctrine  of 
the  old  reform  movement  becomes  more  and  more  obsolete,  the 
number  and  importance  of  the  economist's  excursions  outside  the 
orderly  region  of  his  inherited  economy  become  more  frequent 
and  of  greater  relative  importance,  until  finally  the  economics 
"extra  cathedra"  becomes  by  force  of  social  circumstances  more 
vital  than  the  doctrine  ''ex  cathedra"  and  finds  systematic  expres- 
sion as  the  theoretical  background  of  a  new  movement  of  basic  social 
reform. 

Ill 

That  the  foregoing  analysis  is  correct  so  far  as  the  development 
of  orthodox  political  economy  out  of  the  speculative  portions  of  the 
Wealth  of  Nations  is  concerned  there  can  be  no  doubt.  While 
the  subordinate  articles  of  economic  doctrine  have  varied  widely 
during  the  course  of  the  century,  still  the  very  extraordinary  con- 
tinuity of  basic  dogma  is  a  matter  of  common  observation  and 
acceptance.  It  is  interesting  to  note,  however,  that  all  the  phe- 
nomena of  the  early  development  of  the  "principles  of  political 
economy"  point  not  only  to  the  continuity  of  economic  thought 
from  Smith  to  the  neo-classicists,  but  also  to  the  truth  of  the  theory 
that  those  "principles"  were  derived  from  arguments  which  were 
only  a  means  to  an  end  with  Adam  Smith,  and  that  they  were 
propounded,  organized,  and  welded  into  a  "system"  by  men  who 
inherited  Smith's  instruments,  but  not,  for  the  most  part,  his 
problems. 

The  common  misconception,  according  to  which  political 
economy  was  thought  to  be  the  orderly  development  of  a  set  of 
"principles"  into  a  purely  "descriptive"  science,  originated  in  the 
peculiar  logical  device  which  was  a  decisive  factor  in  routing  the 
argumentative  forces  of  mercantilism — or  rather  of  the  dynastic 
conception  of  society  of  which  mercantilism  was  the  economic 
expression.  The  "natural  order"  first  came  into  general  use  as  a 
weapon  of  offense  and  defense  against  the  "divine  prerogative" 
in  the  struggle  of  parliament  with  the  Stuarts.  It  is  very  conven- 
ient indeed,  as  the  rebellious  American  colonists  discovered  in  their 
turn,  to  be  able  to  base  one's  claims  for  a  redisposition  of  rights  and 


30  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

privileges  upon  something  which  gives  a  greater  impression  of  ulti- 
mate authority  than  individual  opinion.  It  was  perfectly  natural, 
therefore,  in  view  of  the  greater  vogue  of  the  "natural  order"  as  the 
basis  of  the  new  political  faith  of  the  times,  that  the  same  sanction 
should  be  applied  to  new  economic  ideals.  The  system  and  the 
doctrine  of  trade  regulations  which  formed  the  framework  of 
mercantilism  being  essentially  dynastic  in  effect  and  in  purpose, 
it  was  quite  natural  that  the  revolt  to  freedom  of  economic  inter- 
course and  to  the  exaltation  of  agriculture  over  manufacturing 
should  adopt  the  technique  of  the  political  struggle.  Thus  in  the 
writings  of  the  physiocrats  we  find  the  chief  weapon  of  rebellious 
republicans  used  to  maintain  an  economic  doctrine  which  included 
among  other  things  "que  I'autorite  souveraine  soit  unique  et 
superieure  a  tous  les  individus  de  la  societe,"  and  "que  la  propriete 
des  bien-fonds  et  des  richesses  mobilieres  soit  assuree  a  ceux  qui  en 
sont  les  possesseures  legitimes.'" 

This  paradox  in  the  use  of  the  "natural  order"  in  political  and 
economic  thinking  was  rendered  relatively  harmless  by  the  fact  that 
the  physiocrats  and  Adam  Smith  took  particular  pains  to  avoid 
explicitly  political  controversy.  Their  work  as  economists  was  to 
combat,  not  dynasties,  but  trade  regulations,  and  they  were  there- 
fore content  to  define  the  economic  system  which  pursuit  of  the 
"natural  order"  would  prescribe  to  a  sovereign  without  defining 
sovereignty  itself.^  This  enabled  them  to  use  the  same  watchwords 
of  liberty,  equality,  and  justice  as  the  basis  of  their  economic  pro- 
posals as  were  commonly  employed  in  the  struggle  for  popular 
forms  of  government. 

That  they  recognized  the  polemic  nature  of  their  work  can 
hardly  be  doubted  in  the  face  of  their  own  explicit  statements  to  that 
effect.  Adam  Smith  has  been  regarded  for  so  long  as  the  first  of  an 
academic  succession  that  his  more  vital  relations  to  his  predecessors 
and  contemporaries^  are  frequently  overlooked;  but  he  was  keenly 
enough  aware  of  them  himself.     His  whole  political  economy  can 

'  Quesnay,  Maximes,  I,  II. 

"  Adam  Smith,  Wealth  of  Nations,  Book  IV,  chap.  i.x. 

3  Ibid.,  Book  IV,  Introduction. 


FUNCTION  AND  PROBLEMS  OF  ECONOMIC  THEORY  31 

be  regarded  as  an  elaborate  theoretical  defense  of  a  group  of  pro- 
posals the  intent  of  which  was  to  break  down  vested  interest  and  so 
to  bring  about  the  greater  welfare  of  the  community  as  a  whole. 
His  attack  upon  mercantilism  was  an  attack  upon  predatory 
wealth  intrenched  behind  government  grants  and  regulations.  He 
said: 

It  cannot  be  very  difficult  to  determine  who  have  been  the  contrivers  of  this 
whole  mercantile  system;  not  the  consumers,  we  may  believe,  whose  inter- 
est has  been  entirely  neglected;  but  the  producers,  whose  interest  has  been 
so  carefully  attended  to;  and  among  this  latter  class  our  merchants  and  manu- 
facturers have  been  by  far  the  principal  architects.  In  the  mercantile  regula- 
tions ....  the  interest  of  our  manufacturers  has  been  most  peculiarly 
attended  to;  and  the  interest,  not  so  much  of  the  constimers,  as  that  of  some 
other  sets  of  producers,  has  been  sacrificed  to  it.' 

The  so-called  internationalism  of  Adam  Smith  was  a  strategic 
part  of  the  same  attack  upon  the  bloated  plutocracy  of  his  day. 
Smith  hurled  the  thunderbolts  of  laissez  /aire  against  the  narrow 
nationalism  of  colonial  exploitation  and  international  trade  rivalry, 
not  because  there  is  anything  inherently  more  idealistic  in  freedom 
of  intercourse  between  nations  or  in  local  self-government,  but 
because  the  concrete  expression  of  the  nationalism  of  the  times 
was  the  well-nigh  universal  practice  of  sacrificing  the  public  to  a 
small  group  of  favored  merchants  and  manufacturers.^  Restraints 
were  put  upon  the  importation  of  all  foreign  commodities,  and 
bounties  upon  the  exportation  of  certain  products,  artisans  were 
prevented  from  moving  to  customer  countries,  colonial  markets 
were  created  by  the  rigid  exclusion  of  foreign-made  goods — all  in  the 

'  Ibid.,  Book  IV,  end  of  chap.  viii. 

'  It  is  a  well-known  fact  that  mercantile  doctrines  were  formulated  for  the  most 
part  by  successful  merchants.  This  fact  need  not  necessarily  be  interpreted  as  impugn- 
ing the  sincerity  of  the  mercantilist  writers.  On  the  contrary,  it  is  to  be  understood 
as  explaining  why  those  writers  were  able  to  expound  economic  doctrines  which,  judged 
in  the  light  of  modem  standards  of  welfare  and  by  unprejudiced  minds,  are  so  patently 
fallacious.  The  shining  example  of  this  sort  of  thing  is  Sir  Josiah  Child,  the  author  of 
the  Discourse  upon  Trade.  Sir  Josiah  was  able  to  control  the  East  India  Company  and 
to  divert  an  income  of  hitherto  unheard-of  proportions  to  his  own  pocket  by  the 
judicious  corruption  of  court,  commons,  and  electorate.  For  a  description  of  his 
methods  see  Macaulay's  History  of  England,  chap,  xv-iii. 


32  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

interest  of  the  favored  producers'  and  to  the  "almost  constant" 
detriment  of  both  the  native  and  the  colonial  consumer.^ 

But  no  fight  against  economic  inequality  and  injustice  can 
succeed  except  in  so  far  as  a  feasible  substitute  can  be  offered 
for  the  existing  order.  It  is  to  be  expected,  therefore,  as  a  matter 
of  good  logic,  that  any  proposed  social  reform  will  meet  with 
general  acceptance  only  after  it  has  been  clearly  demonstrated  that 
the  new  system  will  be  proof  against  the  corruption  which  has 
disintegrated  the  old.  Adam  Smith  was  well  aware  of  this;  he 
saw  that  an  assault  upon  mercantilist  practices  could  be  successful 
only  if  it  included  an  attack  on  the  economic  theory  which,  in  effect, 
justified  those  practices.  This  meant  that  he  must  formulate  an 
economic  doctrine  to  which  mercantilist  practices  would  be  repug- 
nant. The  self-evident  fact  that  the  evils  which  he  was  interested 
in  combating  were  immediately  due  to  governmental  interference 
(instigated  by  the  "special  interests")  in  industrial  affairs  gave  him 
his  clue;  the  ethical  theories  which  had  formed  the  background 
of  his  thinking  during  his  entire  mature  life  showed  him  how  to 
follow  out  that  clue.  The  result  was  the  economics  of  the  "natural 
order,"  laissez  faire,  and  the  "guiding  hand." 

This  phase  of  Smith's  work  has  been  the  subject  of  such  uni- 
versal discussion  that  it  has  almost  come  to  be  taboo;  but  it  is 
necessary  to  speak  of  it  long  enough  to  point  out,  first,  that  the  doc- 
trines of  value,  rent,  and  wages  derive  their  significance  entirely 
from  the  fact  that  they  are  a  part  of  the  theoretical  justification  of 
the  attack  upon  the  existing  governmental  regulations  of  trade 

'  See  William  Cunningham,  Growth  of  English  Industry,  Part  III,  chap.  xi.  Of 
course,  the  extent  to  which  governmental  interference  in  industrial  affairs  is  prompted 
by  the  "special  interests"  is  always  a  matter  of  general  speculation  about  which  little 
evidence  can  be  gathered;  but  the  more  intelligent  business  men  usually  have  some 
inkling  of  what  is  going  on,  and  Adam  Smith  had  many  acquaintances  among  this 
class.  Then,  as  now,  facts  which  can  be  cited  without  fear  of  the  charge  of  libel  were 
brought  to  light  only  when  special  investigation  followed  some  particularly  notorious 
affair — such,  for  instance,  as  the  investigation  of  the  South  Sea  Company.  This 
investigation  brought  to  light  the  fact  that  122  lords  and  462  commoners  had  profited 
to  the  extent  of  several  millions  of  pounds  out  of  the  nefarious  activities  of  the  South 
Sea  Company.  For  an  account  of  this  investigation  see  W.  R.  Scott,  Joint  Stock 
Companies  to  1720,  III,  331-46. 

*  Adam  Smith,  op.  cit.,  Book  IV,  chap.  viii. 


FUNCTION  AND  PROBLEMS  OF  ECONOMIC  THEORY  t,t, 

and  industry;  and,  secondly,  that  since  Smith's  main  argument 
was  concentrated  upon  the  destruction  of  certain  specific  abuses 
in  the  economic  organization  of  his  own  time,  it  is  absurd  to 
attribute  an  infinite  efficacy  for  the  solution  of  all  subsequent 
problems  of  freedom  and  regulation  either  to  his  doctrines  them- 
selves or  to  his  own  opinion  of  them.  That  is,  as  regards  the  first 
point,  one  must  bear  in  mind  constantly  the  fact  that  Smith  was 
not  reasoning  in  a  vacuum;  that  he  intended  all  through  the  first 
book,  for  instance,  to  come  out  at  the  end  with  the  conclusion  that 
the  interests  of  his  opponents,  "those  who  live  by  profit,"  are 
"never  exactly  the  same  with  that  of  the  public,"  since  their  profits 
are  "low  in  rich  and  high  in  poor  countries,"  and  that  they  of  all  men 
know  their  own  interests  and  are  constantly  seeking  to  obtain 
governmental  advantages  in  the  pursuit  of  them.^  And,  in  the 
second  place,  Smith  made  no  pretense  of  dictating  the  form  of  all 
future  industry  and  commerce.  He  proposed  the  abolition  of  a 
specific  set  of  economic  obstructions  on  the  theoretical  grounds  that 
the  economic  order  is  an  automatic  machine  which  needs  no  regula- 
tion; yet  he  also  specifically  recognized  the  beneficence  of  several 
t3rpes  of  governmental  regulation  of  industrial  aft'airs.^  His 
theories  of  laissez  faire,  therefore,  have  no  necessary  reference  to 
any  other  problems  than  those  with  which  he  was  dealing. 

IV 

Bentham's  Manual  of  Political  Economy  was  an  early  instance 
of  the  attempt  to  draw  together  the  theoretical  phases  of  Smith's 
attack  on  mercantilism  into  a  formal  "science"  of  economics. 
The  attempt  to  reduce  Smith's  principles  to  a  state  of  absolute 
logical  finality  received  a  good  start  from  Bentham's  insistence 
that  economic  theory  should  not  recognize  the  regulation  of  even  the 
maximum  rate  of  interest.^  At  the  same  time  Bentham  was 
engaged  in  working  out  an  ethical  system  which  was  practically  a 

^Ibid.,  Book  I,  chap.  ii. 

'  See,  for  instance,  his  remarks  on  the  fixing  of  a  legal  rate  of  interest  in  Book  II, 
chap. iv. 

^  Bentham,  Defense  of  Usury;  see  letter  xiii. 


34  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

transfusion  of  Smith's  arguments  into  a  theory  of  the  moral  organi- 
zation of  society.^ 

That  the  functional  significance  of  Adam  Smith's  work  was  being 
forgotten  at  the  same  time  that  some  of  the  theories  of  his  devising 
were  being  perpetuated  and  perfected  is  clearly  indicated  by  the 
changed  attitude  of  economists  toward  their  work.  Malthus  made 
it  the  "first  business"  of  the  social  philosopher  ''to  account  for 
things  as  they  are;  and  until  our  theories  will  do  this,"  he  said, 
"they  ought  not  to  be  the  ground  of  any  practical  conclusion."^ 
This  does  not  amount  to  a  complete  denial  of  the  practical  function 
of  economic  theory;  but  it  does  relegate  the  work  of  social  recon- 
struction, which  with  Smith  was  anterior  to  the  formulation  of 
theory,  to  a  place  subordinate  and  posterior  to  the  discovery  of  the 
"laws  which  regulate  the  movements  of  society."^  So  far  as 
doctrine  is  concerned  Ricardo  "is  essentially  of  the  school  of  Smith, 
whose  doctrines  he  in  the  main  accepts,  whilst  he  seeks  to  develop 
them,  and  to  correct  them  in  certain  particulars";''  yet  he  not  only 
considered  it  the  "principal  problem  in  political  economy  ....  to 
determine  the  laws  which  regulate  this  distribution  (rent,  profit, 
and  wages),"  but  even  deviated  from  Smith's  conception  of  the 
function  of  the  economist  so  far  as  to  maintain  that  if  his  principles 
should  be  found  correct  "it  will  be  for  others,  more  able  than 
himself,  to  trace  them  to  all  their  important  consequences. "^ 
Senior  took  the  final  step.  While  endeavoring  to  resolve  his 
science  to  a  geometry  of  four  axioms,  "the  first  a  matter  of  con- 
sciousness, the  three  others  matters  of  observation  ....  scarcely 
requiring  proof  or  even  formal  statement,"^  he  specifically  excluded 
all  problems  of  welfare  and  of  social  reform  from  the  economist's 
sphere  of  influence.     "All  these  are  questions  of  great  interest  and 

'See  Lc'drcs  d'A.  Comptc  a  J.  S.  Mill,  p.  4.  Also  Benedetto  Croce,  Philosophy 
of  the  Practical  (English  translation),  Part  II,  chap.  vii. 

^Malthus,  Principles  of  Political  Economy,  p.  8. 

^Ibid.,  p.  10. 

■t  Ingram,  History  of  Political  Economy,  p.  122. 

5  Ricardo,  Principles  of  Political  Economy,  preface  to  the  first  edition. 

*  Senior,  Political  Economy  (6th  ed.),  pp-  3,  26. 


FUNCTION  AND  PROBLEMS  OF  ECONOMIC  THEORY  35 

difficulty,  but  no  more  form  part  of  the  science  of  political  economy, 
in  the  sense  in  which  we  use  that  term,  than  navigation  forms  part 
of  the  science  of  astronomy.'" 

John  Stuart  Mill  wrote  his  major  contribution  to  the  subject 
with  the  avowed  intention  of  following  what  he  conceived  to  be  the 
lead  of  Adam  Smith;  but  although  his  conception  of  Smith's  work 
as  the  "philosophy  of  society"  was  a  specific  recognition  of  phases 
of  Smith  which  had  been  more  or  less  lost  sight  of.  Mill  did  not 
apprehend  the  purely  occasional  and  directive  nature  of  Smith's 
theoretical  achievements.^  Furthermore,  Mill's  recognition  of 
social  phenomena  and  problems  which  had  escaped  the  direct  atten- 
tion of  earlier  writers  was  recorded  as  a  series  of  "extra  cathedra" 
addenda  to  his  formulation  of  orthodox  economic  doctrine,  as  will  be 
noted  in  a  later  paragraph.  Consequently  his  book  has  been  quite 
generally  received  as  "an  admirably  lucid  and  even  elegant  exposi- 
tion of  Ricardian  economics  ....  but,  notwithstanding  the  intro- 
duction of  many  minor  novelties,  it  is,  in  its  scientific  substance, 
little  or  nothing  more."^  Mill's  extraneous  qualifications  of  eco- 
nomic dogma  did  not  prevent  him  from  carrying  on  the  accumu- 
lating tradition  of  economics  as  the  science  of  value,  rent,  wages, 
interest,  and  profits.'' 

Furthermore,  in  spite  of  intense  controversy  over  moot  points 
in  value  theory,  one  m^ay  safely  say  that  modern  orthodox  economics 
does  not  differ  materially  from  that  of  J.  S.  Mill.  The  rise  and 
growth  of  the  various  "schools"  which  have  attempted  to  give 
some  special  terminological  form  to  the  economics  of  free  competi- 
tion is  so  familiar  to  everyone  that  it  needs  only  to  be  mentioned. 
It  is  very  well  recognized  that  the  violent  disputes  between  the 
exponents  of  the  various  types  of  logical,  geometrical,  and  algebraic 
marginal  analysis  are  dealing  only  with  the  technique  of  economic 
doctrine,  and  that  the  very  intensity  with  which  the  terminological 
controversy  is  carried  on  is  the  surest  indication  of  the  fundamental 

^  Ibid.,  p.  2. 

'  J.  S.  Mill,  Principles  of  Political  Economy,  Preface. 

3  Ingram,  op.  cit.,  p.  149. 

■•  Ibid.,  p.  148,  note  on  Laughlin's  abridgment  of  Mill. 


36  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

agreement    of    all    the    schools    in    the    major    assurqptions    of 
classical  economics.^ 

V 

Before  turning  back  to  note  the  particulars  in  which  the  econo- 
mists of  the  nineteenth  century,  on  the  one  hand,  carried  through 
to  a  logical  conclusion  the  social-reform  movement  begun  by  Adam 
Smith,  and,  on  the  other  hand,  threw  out  occasional  informal  sug- 
gestions relative  to  new  social  problems  which  strict  logic  excluded 
from  their  systems,  it  is  important  to  note  how  the  objects  of 
Smith's  polemics  fared  under  the  new  system  of  natural  liberty. 
The  readjustment  of  ''business"  to  the  new  conditions  created  by 
the  breaking  down  of  the  protecting  regulations  which  had  been 
thrown  about  the  favored  industries  was  complicated  by  two  fea- 
tures of  the  industrial  development  of  the  period  which  are  nearly 
unique  in  history.  In  the  first  place,  Adam  Smith  wrote,  as  every- 
one knows,  just  at  the  beginning  of  the  introduction  of  the  tech- 
nique of  machinery  driven  by  steam-power.  Secondly,  the 
preliminary  eras  of  discovery  and  the  founding  of  North  American 
colonial  enterprises  under  conditions  of  great  hardship  and  little 
profit  were  just  giving  way  to  a  period  during  which  the  North 
American  colonies — thirteen  of  them  enjoying  a  hard-won  political 
independence — were  beginning  to  expand  in  territory  and  popula- 
tion at  a  rate  that  was  simply  prodigious.  This  combination  of 
circumstances  produced  the  well-known  phenomenon  of  the  rapid 
rise  of  modern  machine  industry.  In  a  period  of  tremendous 
commercial  and  territorial  expansion — when  great  capital  funds 
are  accumulated,  all  of  which  naturally  belong  to  someone — many 
poor  men  must  necessarily  become  rich,  some  because  of  great 
native  genius  for  seizing  upon  the  opportunities,  many  by  sheer 
force  of  circumstances.  In  such  a  period,  therefore,  the  voice  of 
the  self-made  man  is  continually  heard  loudly  praising  his  creator 
and  naturally  enough  the  conditions  under  which  his  genius  received 
such  golden  recognition. 

'  Veblen  calls  the  whole  marginal  method  of  analysis  a  "taxonomy"  that  accepts 
the  " pre-Darwinian "  assumptions  of  classical  theory.  See  Veblen's  article,  "Pro- 
fessor Clark's  Economics,"  Quarterly  Journal  of  Economics,  XXII,  158. 


FUNCTION  AND  PROBLEMS  OF  ECONOMIC  THEORY  37 

The  philosophy  of  Poor  Richard's  Almanac,  therefore,  is  not  a 
servile  reiteration  of  the  doctrines  of  the  laissez  faire  economists. 
It  is  rather  the  voice  of  successful  ''business"  pronouncing  its 
benediction  upon  the  conditions  of  its  success.  But  the  condition 
which  most  readily  occurs  to  the  business  man  as  the  determinant  of 
his  success  is  that  he  was  "free  "  to  carve  out  his  own  destiny.  This 
naturally  seems  to  him  more  important  than  that  there  was  an 
exceptionally  large  and  juicy  continent  to  be  carved  just  as  he 
happened  along,  since  it  throws  all  the  emphasis  upon  his  own 
prowess.  He  therefore  sees  in  the  great  industrial  changes  of  the 
nineteenth  century  only  "what  business  has  done  for  the  country." 
He  is  compelled  by  his  own  egotism  to  the  belief  that  the  system 
which  has  been  so  good  for  him  has  at  the  same  time  been  the  best 
possible  regime  for  the  interests  of  society.  "By  the  customary 
apologetic  generalization  from  individual  acquisitive  interests  to 
general  social  welfare,  the  idea  of  social  good  as  a  consequence  of 
individual  gain  became  a  part  of  currently  accepted  social  phi- 
losophy and  currently  formulated  economic  theory" — the  economic 
theory  of  the  men  "whose  pecuniary  interests  found  expression  in 
the  poHtical  creeds  of  liberal  parties,"  and  "whose  fortunes  were 
bound  up  with  individual  liberty."' 

In  some  such  fashion  as  this  it  has  come  about  that  "those  who 
live  by  profit,"  firm  in  the  conviction  of  the  identity  between  the 
success  of  "business"  and  the  proper  organization  of  society,  and 
secure  in  the  control  of  wealth  and  power,  have  become  the 
defenders  of  the  freedom  of  industry  from  governmental  regulation. 
Surely  there  is  nothing  so  very  surprisingly  illogical  in  the  adoption, 
by  those  who  are  the  most  able  to  exert  pecuniary  pressure,  of  a 
creed  of  "freedom  of  contract"  which  "comes  to  mean,  in  effect, 
not  only  that  one  individual  or  group  of  individuals  may  not  legally 
bring  any  other  than  pecuniary  pressure  to  bear  upon  another 
individual  or  group,  but  also  that  pecuniary  pressure  cannot  be 
barred.""     To  such  men  as  these,  holding  such  views  as  these, 

'  W.  H.  Hamilton,  The  Ethical  Implications  of  Current  Economic  Theory.  Un- 
published. Cf.,  also,  Hamilton's  "The  Price-System  and  Social  Policy,"  Journal  of 
Political  Economy,  XXVI,  31. 

»  Veblen,  Theory  of  Business  Enterprise,  p.  274. 


38  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

every  attempt  to  protect  the  laborer,  the  consumer,  and  the  small 
business  man  against  their  rapacity — from  Owen's  agitation  for 
factory  legislation  to  the  Danbury  Hatters'  case — has  been  de- 
nounced as  governmental  favoritism,  "the  subserviency  of  repre- 
sentatives of  the  whole  people  to  the  dictation  of  class  legislation."^ 
Through  the  course  of  the  development  of  modern  capitalistic 
industry  the  theory  of  mercantilism  (but  not  its  practices)  has  been 
forgotten  by  the  interests  of  which  it  was  formerly  the  chief  bulwark, 
and  the  creed  which  they  now  profess  is  substantially  derived  from 
the  arguments  by  which  the  old  order  was  broken  down.  "We 
protest  against  class  legislation  ....  and  we  assert  that  all  forms 
of  class  legislation  are  un-American  and  detrimental  to  our  common 
good.  We  pledge  our  loyalty  to  our  judiciary,  upon  the  mainte- 
nance of  which,  unswerved  by  passing  clamor,  rests  the  perpetua- 
tion of  our  laws,  our  institutions,  and  our  society."^  Thus  "those 
who  live  by  profit"  have  become  the  arch-defenders  of  the  social 
arrangements  which  were  forced  upon  them  with  the  greatest 
difficulty.  The  continuity  of  the  process  lies  in  the  fact  that  they 
are  now,  as  then  and  always,  the  ardent  supporters  of  whatever  is. 

VI 

'  It  must  not  be  inferred  from  this  sketch  of  the  manner  in  which 
both  economic  theory  and  business  interests  became,  through  a 
century  of  laissezfaire,  the  defenders  of  the  existing  order  of  extreme 
individualism,  that  the  economics  of  the  nineteenth  century  is  a 
doctrine  of  complete  assent.  Whatever  a  man's  creed  may  be, 
there  are  always  many  things  in  the  world  which  provoke  him  to 
raise  a  dissenting  voice,  and  economists  are  always  especially  sus- 
ceptible to  this  particular  type  of  stimulus. 

In  the  first  place,  the  breakdown  of  mercantilism  was  by  no 
means  consummated  in  the  time  of  Adam  Smith;  there  still 
remained,  long  after  individualism  had  become  the  rule  of  the 
day,  many  social  and  legal  institutions  which  had  not  yet  been 
adapted   to   the  general   scheme   of  laissez  /aire.     Furthermore, 

'  "Resolutions  of  the  National  Association  of  Manufacturers,"  May,  1913. 
*" Resolutions    of  the  National   Association  of  Manufacturers,"   May,   1913; 
Political  Creed,  arts.  3  and  4. 


FUNCTION  AND  PROBLEMS  OF  ECONOMIC  THEORY  39 

fresh  economic  problems  are  constantly  arising  in  every  society 
into  the  solution  of  which  the  economist  is  sure  to  be  drawn,  as 
Ricardo  was  drawn  into  the  bullion  controversy.  These  activities 
are,  in  a  sense,  summed  up  in  the  legal-reform  movement  which 
was  lead  by  Bentham  and  received  the  full  support  of  the  entire 
classical  group. 

The  reconstruction  of  the  antiquated  legal  system  of  England 
was  in  actual  truth  the  creation  of  a  science  of  jurisprudence  in  the 
image  of  Ricardian  economics.  It  rested  upon  two  fundamental 
principles:  (i)  "The  right  aim  of  legislation  is  the  carrying  out 
of  the  principle  of  utihty,  or,  in  other  words,  the  proper  end  of  every 
law  is  the  promotion  of  the  greatest  happiness  of  the  greatest 
number."  (2)  "Every  person  is  in  the  main  and  as  a  general  rule 
the  best  judge  of  his  own  happiness.  Hence  legislation  should  aim 
at  the  removal  of  all  those  restrictions  on  the  free  action  of  an 
individual  which  are  not  necessary  for  securing  the  like  freedom 
on  the  part  of  his  neighbors."^  It  was  to  the  prosecution  of  these 
reforms  that  Bentham  devoted  his  life.  "Bentham  was  primarily 
neither  a  utilitarian  moralist  nor  a  philanthropist:  he  was  a  legal 
philosopher  and  a  reformer  of  the  law.'""  But  the  aspect  of  his 
work  which  is  most  significant  in  this  connection  is  the  fact 
that  in  spite  of  its  importance  it  was  not  a  work  of  fundamental 
social  reform,  as  was  that  of  Adam  Smith.  For  utilitarianism^ 
is,  after  all,  only  the  ethics  of  laissez  /aire,  and  its  applica-  ^ 
tion  to  the  field  of  jurisprudence  is  not  a  new  reform  move- 
ment but  rather  a  continuation  of  the  general  attack  upon 
mercantilism. 

While  the  poor-law  and  free-trade  agitations  centered  about 
the  reconstruction  of  certain  laws,  they  were  sufficiently  important 
to  be  classed  as  separate  movements;  for  each  called  forth  a  con- 
siderable literature  of  its  own.  At  the  same  time  it  is  equally 
obvious  that  they  were  really  only  chapters  in  the  individualistic 
reaction  against  mercantilism.  The  inefficacy  of  the  poor  laws 
followed  as  an  inevitable  corollary  from  the  Malthusian  doctrine  of 
population. 

'  Dicey,  Law  and  Public  Opinion  in  England,  pp.  136, 146. 
'Ibid.,  p.  127. 


40  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

The  poor  laws  of  England  tend  to  depress  the  general  condition  of  the  poor 
in  two  ways.     Their  first  obvious  tendency  is  to  increase  population  without 

increasing  the  food  for  its  support Secondly,  the  quantity  of  provisions 

consumed  in  workhouses  ....  diminishes  the  shares  that  would  otherwise 
belong  to  the  more  industrious  and  more  worthy  members,  and  thus,  in  the 
same  manner,  forces  more  to  become  dependent.' 

And  this  entire  argument  was  an  equally  direct  consequence  of 
the  original  postulate  of  laissez  faire.  If  it  is  established  that 
"wages  should  be  left  to  the  fair  and  free  competition  of  the 
m.arket,  and  should  never  be  controlled  by  the  interference  of 
the  legislature,"  then  it  follows  that  "the  clear  and  direct  tend- 
ency of  the  poor  laws  is  in  direct  opposition  to  these  obvious 
principles."* 

Although  free  trade  is  an  equally  obvious  corollary  to  the 
general  doctrine  enunciated  by  Adam  Smith,  and  although  restric- 
tions upon  exportation  and  importation  fell  away  fairly  rapidly, 
still,  either  because  of  the  natural  strength  of  the  landed  gentry  in 
Parliament,  or,  as  Ricardo  suggests,^  because  the  landowner  could 
cite  the  authority  of  Adam  Smith  for  imposing  high  duties  on  the 
importation  of  foreign  corn,  the  corn  laws  continued  to  be  the  sub- 
ject of  a  very  bitter  controversy  which  lasted  until  their  repeal  in 
1846.  The  classical  economists  took  an  important  part  in  the  anti- 
corn  law  struggle;  but  here  again  their  work  was  largely  the 
rectification  of  a  logical  error  into  which  Smith  had  been  led  by  his 
obsession  with  the  evil  ways  of  traders  and  manufacturers.  Mal- 
thus  and  Ricardo  pointed  out  what  Smith  had  overlooked,  namely, 
that  "landlords  have  a  most  decided  interest  in  the  rise  of  the 
natural  price  of  corn;  for  the  rise  of  rent  is  the  inevitable  conse- 
quence of  the  difficulty  of  producing  raw  produce,  without  which  its 
natural  price  could  not  rise."'»  But  the  doctrine  of  rent  was  a  con- 
tribution to  economic  theory  only  from  the  point  of  view  of  the 
elaboration  of  formal  principles ;  doubtless  Adam  Smith  would  have 
joined  the  Anti-Corn  Law  League  himself  had  he  lived  to  see  Parlia- 
ment in  the  control — and  the  country  at  the  mercy — of  the  land- 
lord, as  it  had  earlier  been  in  that  of  the  manufacturer. 

'  Malthus,  3d  edition  of  the  Essay,  p.  172.  ^  Ibjd.,  p.  302. 

'  Ricardo,  op.  cil.  (Gonner's  ed.),  p.  82.  ^  Ibid.,  p.  298. 


FUNCTION  AND  PROBLEMS  OF  ECONOMIC  THEORY  41 

While  these  reforms  greatly  extended  the  scope  of  laissez 
faire  doctrine  they  touched  only  certain  phases  of  the  great 
social  problems  which  had  been  inaugurated  by  the  rapid  growth 
of  factory  production,  and  did  not  cut  straight  at  the  source 
of  infection,  as  Adam  Smith  at  least  intended  to  do.  To  accom- 
plish this  task  the  classicists  would  have  been  obliged  to  alter  their 
central  doctrines — to  make  their  theory  take  cognizance  of  the 
social  needs  of  the  day.  Adam  Smith  was  great  enough  to  see  that 
that  is  the  function  of  economic  theory;  the  classicists  were  not. 
They  lived  too  soon  after  the  overwhelming  success  of  the  initial 
promulgation  of  laissez  faire  to  be  able  to  modify  their  individualism 
even  for  the  protection  of  the  miserable  victims  of  the  early  decades 
of  the  factory  system.  Malthus'  refusal  to  admit  the  theoretical 
possibility  of  the  evils  of  an  apparent  oversupply  of  labor  being 
overcome  except  by  a  "moral  restraint"  which  he  had  recognized 
in  his  first  edition  to  be  chimerical  enough,'  and  Ricardo's  heartless 
demonstration  that  "in  the  natural  advance  of  society  the  wages 
of  labor  will  have  a  tendency  to  fall,"  and  that  the  only  escape  from 
the  horrors  of  this  process  was  the  rather  contradictory  "stimula- 
tion" of  the  laboring  classes  "to  have  a  taste  for  comforts  and 
enjoyments"^ — such  doctrines  were  well  calculated  to  win  for 
economics  the  sobriquet  of  "Dismal  Science." 

The  surprising  thing,  however,  in  view  of  the  orthodox  inter- 
pretation of  the  function  of  economics,  is  not  that  the  classicists 
were  dismal  scientists,  but  that  they  were  so  unscientific  as  to  take 
any  cognizance  of  the  need  for  social  reform.  After  Malthus  had 
formulated  his  principle  of  population  in  all  its  details  in  his  first 
edition  of  the  essay,  he  rewrote  the  whole  thing,  making  no  sub- 
stantial changes  in  doctrine,  but  devoting  his  fourth  book  to  a 
sermon  on  the  virtues  of  a  long  and  chaste  bachelorhood.  Ricardo 
stopped  in  the  middle  of  his  terrible  chapter  on  wages  and  inserted  a 
paragraph  of  gratuitous  advice  to  the  effect  that  if  the  laboring 
classes  could  be  induced  to  acquire  a  standard  of  living  involving 
a  large  margin  of  desirable  but  dispensable  gratifications,  the 
elasticity  of  that  margin  would  ward  off  both  indiscreet  enlargement 

'  Malthus,  ist  ed.,  in  Ashley  Classics,  p.  14, 11.  3  and  4. 
"  Ricardo,  op.  cit.,  p.  77. 


42  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

of  families  in  times  of  plenty  and  unbearable  hardship  in  times 
of  want.  If  economics  is  a  descriptive  science  and  the  economist 
is  a  detached  searcher  for  the  laws  of  the  universe,  why  should  men 
like  Ricardo  and  Malthus  have  paused  even  to  notice  such  mundane 
affairs  as  these?  Why,  if  his  business  was  only  that  of  a  clear 
expositor  of  the  operation  of  social  principles,  should  John  Stuart 
Mill  have  gone  quite  out  of  the  province  of  economic  doctrine,  as 
he  himself  formulated  it,  to  defend  state  regulation  of  the  hours  of 
labor,^  governmental  protection  of  the  unwise  consumer,^  the 
direction  of  industry  by  the  association  of  laborers  with  the  capital- 
ist and  of  laborers  with  one  another,^  and  even  the  progressive 
taxation  of  incomes  and  consumption  ?"• 

The  answer  seems  to  be,  as  has  already  been  suggested,  that  in 
spite  of  their  obsession  with  the  doctrines  which  they  had  assembled 
around  Adam  Smith's  conception  of  the  "natural"  organization 
of  society,  the  economists  of  the  nineteenth  century  were  unable 
completely  to  avoid  the  social  problems  of  their  own  times.  They 
assumed  the  role  of  reformers  in  spite  of  themselves,  and  therefore 
they  turned  aside  every  now  and  then — more  and  more  frequently 
as  time  went  on — to  meet  the  demands  of  their  own  social  situation. 
With  John  Stuart  Mill  there  was  already  a  considerable  body  of 
extraneous  economic  theory — such  as  that  mentioned  above — 
which  had  but  little  relation  to  the  system,  and  was  called  into 
existence  in  a  different  manner  from  the  main  body  of  doctrine. 

If  this  were  an  attempt  at  a  demonstration,  and  not  merely 
an  illustration,  of  the  theory  here  advanced  of  the  functional  history 
of  economic  thought,  it  would  be  necessary  to  study  the  latter  part 
of  the  nineteenth  century  with  the  greatest  care.  Such  a  study  will 
not  be  attempted  here  because  it  would  represent  too  great  a  diver- 
sion from  the  main  purpose  of  the  paper.  The  principal  features 
of  the  transition  from  the  economics  of  "approbation"  to  the  eco- 
nomics of  "reconstruction"  are,  however,  first,  the  rapid  growth 
in  importance  of  extra  doctrinal  economics,  which  was  brought  to 

'  J.  S.  Mill,  op.  cit.,  Book  V,  chap,  xi,  par.  12. 
*  Ihid.,  Book  V,  chap,  xi,  par.  7. 

3  Ibid.,  Book  IV,  chap,  vii,  par.  4. 

4  Ibid.,  Book  V,  chap,  iii,  par.  5. 


FUNCTION  AND  PROBLEMS  OF  ECONOMIC  THEORY  43 

a  head  by  J.  B.  Clark's  distinction  between  the  older  economics  as 
the  theory  of  a  hypothetical  "static"  order  and  the  newer  specula- 
tion as  the  theory  of  the  ''dynamic"  order,  in  which  the  exact 
operations  of  the  classical  principles  are  always  disturbed  by  the 
forces  of  change;  and,  second,  the  growing  tendency  through  the 
last  two  decades  to  expose  and  ruthlessly  criticize  the  most  funda- 
mental assumptions  of  orthodox  theory — a  tendency  which,  per- 
haps, finds  its  culmination  in  a  series  of  articles  by  J.  M.  Clark, 
now  in  process  of  publication.'  Furthermore,  that  each  of  these 
tendencies  is  actuated  by  the  growing  perception  of  the  absurd 
inadequacy  of  the  fundamental  notions  of  orthodox  economics  as 
the  basis  of  a  theory  of  progressive  control  of  modern  industrial 
society  is  a  fact  too  generally  recognized  to  demand  more  than 
mere  mention. 

VII 

If,  then,  the  interpretation  of  the  natural  history  of  economic 
doctrines  which  has  been  suggested  in  this  paper  is  correct,  one 
complete  cycle  has  expired  since  the  period  of  Adam  Smith.  The 
present  generation  should,  according  to  this  view,  be  undergoing  a 
general  social  reconstruction  reaching  far  down  among  the  basic 
institutions  of  the  economic  order.  And  at  the  same  time  a  new 
economic  doctrine  should  be  in  process  of  formation  as  one  of  the 
instruments  of  control  over  the  process  of  social  renovation  which 
should  be  as  unlike  the  doctrines  that  underlay  the  old  order  as 
the  individualism  of  the  physiocrats  and  Adam  Smith  was  unlike 
mercantilism. 

There  is  a  considerable  amount  of  evidence  that  this  is  actually 
the  case.  Not  only  have  many  economists  come  to  the  conclusion 
that  "if  the  program  of  social  progress  does  not  harmonize  with 
the  existing  economic  science  ....  the  fault  is  with  economics";^ 
but  also  in  the  last  few  years  four  notable  attempts  to  correct  this 
fault  have  been  going  on.  Veblen,  Hobson,  Cannan,  and  Clay  have 
systematically  attacked  the  problem,  not  of  revising  economic 
doctrine,  but  of  giving  an  account  of  the  modern  social  order  which 

'The  first  of  these  articles  a^-ptd^xeAmihe^  Journal  of  Political  Economy, 'KX.W,  i. 
^  Davenport,  op.  ciL,  p.  528. 


44  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

shall  square  with  the  facts  of  social  injustice  and  thus  be  relevant  to 
the  needs  of  the  age.^ 

In  three  respects  the  work  of  these  men  is  exactly  parallel  to  that 
of  Adam  Smith;  in  a  fourth  it  is  equivalent  to  Smith's  work  though 
necessarily  divergent  from  it.  First,  instead  of  following  the  prac- 
tice of  the  doctrinaire  economists  of  making  their  books  consist  of 
discussions  of  "economic  principles,"  they  omit  "a  great  deal  of  the 
discussion  of  wages,  profits,  and  rent,  which  had  some  local  impor- 
tance a  hundred  years  ago  but  is  now  obsolete,"^  and  they  set  out  to 
give  a  thoroughgoing  account  of  the  structure  of  modern  economic 
society  and  the  manner  in  which  that  structure  is  dominated  by  the 
"machine  process."  Adam  Smith  began  his  book  with  a  description 
of  the  division  of  labor,  and  followed  that  with  a  discussion  of  the 
manner  in  which  business  enterprises  were  then  carried  on  by 
individuals  and  by  nations.  Secondly,  they  are  as  absolutely 
ruthless  in  their  exposure  of  the  fallacies  involved  in  the  supposition 
that  the  incomes  which  accrue  to  "pecuniary  magnates  are  com- 
mensurate with  their  services  to  society,"  and  they  are  as  firm  in 
their  insistence  "that  the  gains  of  these  larger  business  men  are  a 
function  of  the  magnitude  of  the  disturbances  which  they  create 
rather  than  of  the  productive  effort,  "^  as  Smith  was  in  his  attacks 
upon  "  those  who  live  by  profit."  Thirdly,  both  before''  and  during 
the  war^  they  have  maintained,  as  Smith  did,  that  it  is  not  the  welfare 
of  nations  which  is  served  by  the  vast  extension  of  the  nations' 
commerce  to  include  foreign  and  especially  semicivilized  countries; 
instead  of  this  it  is  "the  contrivers  of  the  whole  system"  who  profit 
— the  mercantilists  and  exporters  of  speculative  capital,  dynasties, 
and  dynastic  statesmen.  Fourthly,  like  Smith  they  have  endeav- 
ored to  formulate  a  conception  of  social  welfare  upon  which  to 
build;  but,  as  Hamilton  has  pointed  out,^  their  task  has  not  been  as 
easy  as  Smith's. 

'  L.  C.  Marshall's  Readings  in  Industrial  Society  is  an  important  addition  to  this 
literature. 

^  Cannan,  Wealth,  Introduction,  p.  viii.  "•  Hobson,  Imperialism. 

3  Veblen,  Instinct  of  Workmanship,  p.  354.  =  Veblen,  The  Nature  of  Peace. 

'  W.  H.  Hamilton,  "Economic  Theory  and  Social  Reform,"  Journal  of  Political 
Economy,  XXII,  568. 


FUNCTION  AND  PROBLEMS  OF  ECONOMIC  THEORY  45 

Unlike  Smith  and  the  later  economists,  Ilobson  is  concerned  with  a  state 
of  social  well-being  that  can  be  attained  only  by  conscious  effort.  It  must  be 
reached  by  careful  planning,  not  by  the  automatic  operation  of  a  let-alone 
policy.  He  is  therefore  compelled  by  his  problem  to  set  up  an  elaborate 
standard  of  social  welfare,  appraising  in  their  complex  mutual  relations  all 
the  elements  of  a  well-ordered  social  whole. 

VIII 

If  the  question  whether  economics  is  a  descriptive  or  a  directive 
science  arose  from  a  complete  disjunction,  it  would  be  necessary 
to  infer  from  the  interpretation  of  the  function  of  economic  science 
proposed  in  this  paper  that  the  economics  of  the  past  has  not  been 
descriptive.  But  such  a  conclusion  would  be  patently  false.  For 
even  if  it  be  granted  that  the  problems  of  the  science  of  economics 
have  always  been  determined  by  the  needs  of  the  social  order  and 
that  they  always  must  be  so  determined,  it  certainly  does  not  follow 
that  economists  are  therefore  not  interested  in  obtaining  really 
efficacious  solutions  of  those  problems.  And  of  course  the  efficacy 
of  the  economist's  thinking  must  depend  upon  the  clarity  of  his 
vision — that  is  to  say,  upon  the  extent  to  which  his  scientific 
generalizations  are  true  descriptions  of  the  institutional  order.  A 
directive  science  must  necessarily  be  a  descriptive  science. 

Furthermore,  it  seems  probable  that  the  converse  of  this 
proposition  is  also  true.  However  "pure"  a  science  may  be, 
however  remote  from  "practical  affairs"  may  be  its  search  for  the 
ultimate,  it  must  proceed  from  the  conviction  that  ultimate  truth 
is  somehow  worth  having,  that  having  it  would  somehow  make 
a  difference  in  men's  lives.  The  difference  between  sciences  in 
point  of  practicality,  therefore,  seems  to  be,  not  even  a  difference 
of  degree — since  the  most  absolute  science  must  contribute  to  some 
human  need — but  rather  a  difference  in  the  nature  of  the  problems 
of  living  to  the  solution  of  which  the  sciences  contribute.  The 
essential  thing  for  every  scientist  to  understand  is,  therefore,  not 
whether  his  science  is  "pure"  or  not,  but  what  the  actual  problems 
are  about  which  all  his  scientific  studies  must  be  massed.  It  is  to 
this  understanding  that  such  studies  as  the  one  here  presented 
ought  to  contribute. 


CHAPTER  III 

ETHICS  AND  ECONOMICS 
A  STUDY  IN  THE  DEFINITION  OF  TWO  SCIENCES 
'  I 

The  relation  between  ethics  and  economics  is  generally  con- 
ceded to  be  peculiarly  intimate.  It  is  decidedly  more  intimate,  for 
instance,  than  such  a  relationship  as  might  be  supposed  to  exist 
between  any  two  random  sciences  by  virtue  of  their  both  being 
corralled  somewhere  within  the  field  of  human  knowledge. 

This  much  is  an  inescapable  inference  from  the  fact  that  so 
many  of  the  men  who  have  attained  to  eminence  in  one  science  have 
also  found  themselves  drawn  into  a  discussion  of  various  matters 
claimed  exclusively  by  the  other.  Not  only  was  such  economic 
writing  as  was  done  prior  to  the  eighteenth  century  done  almost 
exclusively  by  philosophers  and  theologians  who  wrote  much  more 
voluminously  on  ethical  subjects,  but  many  of  the  greatest  figures 
in  the  history  of  modern  economic  theory  may  be  classified  as 
ethicists  with  equal  propriety.  Thus  the  Wealth  of  Nations  was 
developed  out  of  the  lectures  on  the  principle  of  expediency,  the 
fourth  part  of  the  course  of  lectures  Smith  delivered  from  the  chair 
of  moral  philosophy  at  Glasgow;  Ricardo  was  a  member  of  a 
group  of  men  best  known  for  their  ethical  theories;  Mill  is  generally 
reputed  to  have  developed  the  ethical  phase  of  the  thinking  of  the 
Benthamites  as  much  as  he  did  the  economic. 

At  the  same  time  it  is  patent  that  this  evidence  of  common 
interest  does  not  justify  in  the  least  the  assumption  that  there  is 
any  great  unanimity  of  opinion  or  even  clearness  of  mind  with 
regard  to  the  exact  nature  of  this  relationship  between  ethics  and 
economics.  Thus,  for  instance,  both  Carver  and  Veblen,  among 
American  economists,  give  more  than  a  little  explicit  consideration 
to  ethical  assumptions  and  implications ;  yet  no  one  would  think  of 
attributing  to  them  the  same  opinion  on  any  subject.  Moreover, 
quite  a  number  of  American  ethicists  have  made  a  special  study 

46 


DEFINITION  OF  ETHICS  AND  ECONOMICS  47 

of  economics— e.g.,  Tufts,  Perry,  Fite,  Stuart— without  producing 
even  a  majority  opinion. 

Indeed,  the  exact  nature  of  a  science,  what  it  is  and  what  it  is 
driving  at,  its  relation  to  the  work  of  other  sciences,  is  a  matter  upon 
which  men  find  it  very  hard  to  agree.  This  is  not  so  much  due  to 
wide  and  strongly  held  differences  of  opinion  on  those  doctrines 
and  methods  which  form  the  substance  and  content  of  each  science. 
It  is  due  rather  to  the  difficulty  of  determining  how  each  science 
may  best  be  characterized  and  what  are  the  proper  differentiae 
to  be  employed  in  plotting  the  lines  between  each  science  and  its 
nearest  neighbors."  It  is  essentially  the  difficulty  which  attends 
every  attempt  to  deal  with  abstract  ideas.  Such  attempts  lead 
naturally  to  the  construction  of  a  framework  of  sensory  imagery 
by  means  of  which  the  ideas  become  metaphors  and  so  get  "under- 
stood" after  a  fashion.  Thus  a  science  may  be  metaphoricall}^ 
treated  by  the  emplo}Tnent  of  two  different  sets  of  images,  visual 
and  auditory.  According  to  one  a  science  is  conceived  as  located 
in  space,  occupying  a  certain  field  bounded  by  the  fields  of  adjacent 
sciences.  In  the  auditory  metaphor  a  science  is  characterized  by 
certain  word  sounds  which  are  assumed  to  typify  its  entire  subject- 
matter.  It  is  related  to  other  sciences  through  their  common  use 
of  some  of  the  same  word  symbols  in  combination  with  others 
peculiar  to  those  sciences.  This,  of  course,  is  the  "concept" 
method.  Both  methods  have  been  used  to  distinguish  ethics  and 
economics  and  to  characterize  the  relation  between  them,  and  both 
methods  have  proved  very  misleading. 

II 

By  far  the  commonest  distinction  between  ethics  and  eco- 
nomics is  the  one  summed  up  in  the  phrase  "business  is  business." 
According  to  the  popular  theory  ethics  and  economics,  morals  and 
business,  prevail  in  the  spatially  separate  spheres  of  the  personal 
life  of  the  home  and  the  impersonal  struggle  of  the  commercial 

'  Thus  Davenport  says  of  the  differences  between  Fite  and  Stuart:  "It  will  be 
obvious  that  our  two  philosophers  need  not,  and  very  possibly  do  not,  at  all  disagree 
as  to  the  psychology  of  desire,  but  only  as  to  the  delimitation  of  the  economic  field, 
or  possibly  also  as  to  the  meaning  of  economic  law."  "Scope,  Method,  and  Psychology 
in  Economics,"  Journal  of  Philosophy,  Psychology,  and  Scientific  Methods,  XIV',  623. 


48  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

world.  There  is  a  parallel  to  this  in  the  temporal  limitation  of 
ethics  to  the  seventh  day,  economics  holding  sway  through  the 
six  days  of  the  working  week.  He  is  a  wise  man  who  confines 
each  set  of  principles  strictly  to  its  own  jurisdiction.  "You  can't 
mix  morals  and  business." 

This  sharp  distinction  between  two  entire  phases  of  life  has  its 
origin,  as  everyone  knows,  in  Christian,  or  rather  Pauline,  theology. 
Every  man  leads  two  lives,  one  with  reference  to  the  affairs  of  this 
world  by  which  the  other  is  supported,  the  other  with  reference 
only  to  the  world  to  come.  "The  flesh  is  for  the  soul,  as  the  matter 
for  the  form,  and  the  instrument  for  the  principal  agent.  And 
therefore  the  flesh  is  lawfully  loved,  so  that  it  be  directed  to  the 
good  of  the  soul  as  to  its  end.  But  if  the  last  end  is  set  up  in  the 
mere  good  of  the  flesh,  the  love  will  be  inordinate  and  unlawful."^ 

This  spatial  and  temporal  view  of  the  relation  between  ethics 
and  economics  is  by  no  means  peculiar  to  the  common  man,  nor  is 
it  expressed  exclusively  in  the  language  either  of  learned  doctors  of 
theology  or  of  corrupt  laymen.  For  instance,  Cr-oce  expounds  much 
the  same  "visual"  theory,  from  the  platform  of  Hegelian  metaphysics. 
The  economic  is  the  particular ;  the  ethical  is  the  universal.  "The 
economic  activity  is  that  which  wills  and  effects  only  what  cor- 
responds to  the  conditions  of  fact  in  which  a  man  finds  himself; 
the  ethical  activity  is  that  which,  although  it  corresponds  to  these 
•conditions,  also  refers  to  something  that  transcends  them.  To  the 
first  correspond  what  are  called  individual  ends,  to  the  second 
universal  ends."' 

Of  course  Croce  would  maintain  that  these  two  things,  the 
"judgment  of  convenience"  and  the  yearning  toward  the  "uni- 
versal end,"  contain  each  other.  But  after  all  the  picture  is  really 
of  two  separate  phases  of  life.  The  "concrete  universal"  idea  is 
really  a  logical  device  for  decreasing  the  visibility.  It  blurs  the 
picture,  but  it  leaves  the  economic  and  the  ethical  still  essentially 
distinct.    And  the  phases  of  interest  are  in  all  essentials  those 

'  St.  Thomas,  Siirnma  Theologica,  Part  II,  Question  LV,  art.  i.  The  language  of 
this  quotation  is,  of  course,  Aristotelian;  Aristotle  contributed  the  metaphysical 
form  in  which  the  religious  doctrine  was  expressed. 

*  Croce,  The  Philosophy  of  Ike  Pracllcal  (Ainslee's  translation),  p.  312. 


DEFINITION  OF  ETHICS  AND  ECONOMICS  49 

presented  in  ecclesiastical  theory.  All  affairs  of  this  world  belong 
to  the  economic  phase;'  the  ethical  phase  is  fundamentally  other- 
worldly. 

However,  this  visual  metaphor — this  picture  of  separate  fields 
of  economic  and  ethical  activity — does  not  necessarily  postulate  a 
higher  spiritual  world  to  which  the  soul  turns  in  the  intervals  of 
mundane  emplo}anent.  Even  in  the  popular  mind  the  distinction 
between  business  and  morals  impHes  the  further  contrast  between 
one's  dealings  with  large  numbers  of  personally  unknown  and 
remote  business  men  and  one's  intimate  relations  with  the  mem- 
bers of  one's  own  family  and  neighborhood  and  set.  There  is 
honor  among  friends,  though  they  be  thieves;  but  on  the  market 
let  the  buyer  beware. 

Fite  has  probably  given  this  variant  of  the  separate  field  theory 
its  most  articulate  expression.  "All  of  the  characteristic  differ- 
ences between  the  moral  world  and  the  economic  world,"  according 
to  Fite,  "may  be  derived  from  the  familiar  distinction  between 
personal  acquaintance  and  business  acquaintance,  between  inti- 
mate acquaintance  and  more  distant  acquaintance.  The  economic 
world  is  the  world  of  distant  acquaintance."^ 

Of  course  it  is  obvious  that  life  does  fall  into  certain  temporally 
and  spatially  distinct  phases.    On  Sunday  we  worship  and  abstain 
from  work;    on  week  days  we'  work  and  abstain  from  worship. 
Our  places  of  business  are  spatially  remote  from  our  homes.    To 
this  extent  the  metaphor  is  an  accurate  picture  of  our  lives.    But 
can  these  temporal  and  spatial  distinctions  be  taken  as  not  only 
metaphorically  but  literally  indicative  of  the  distinction  between 
morals  and  business,  and  so  between  ethics  and  economics  ?    Or 
does  the  visual  imagery  do  violence  to  the  abstract  ideas  ?    Ex- 
amination with  a  skeptical  eye  seems  to  indicate  that  it  does.--. 
Christian  theology  has  never  recognized  the  affairs  of  this  world  ! 
as  outside  the  field  of  Christian  ethics.     On  the  contrary,  the  only 
significance  of  the  gospel  of  the  other  world  is  to  bring  the  whole  of    ^ 
life  under  the  jurisdiction  of  the  church.     That,  I  take  it,  is  the 

'  Hence  Croce's  classification  of  hedonistic  ethics  as  economics. 
^  "Moral  Valuations  and  Economic  Laws,"  Journal  of  Philosophy,  Psychology, 
and  Scientific  Methods,  XIV,  6. 


50  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

burden  of  the  passage  quoted  from  St.  Thomas.  There  is  no  doc- 
trine more  obnoxious  to  any  church  than  that  the  whole  duty  of 
man  is  to  go  to  church  on  Sunday.  Again,  if  the  picture  of  the  other 
world  fades  until  no  human  meaning  is  any  longer  visible  in  it, 
as  is  the  case  with  Croce's  metaphysics,  then  by  the  same  token  the 
alleged  distinction  between  two  phases  of  interest  fades  with  it, 
and  the  whole  of  life  is  seen  to  be  included  in  the  phase  of  the 
"judgment  of  expediency."  Croce  did  well  to  make  it  embrace 
utilitarianism.    The  whole  thing  is  there,  ethics  with  economics. 

Furthermore,  the  claim  that  the  line  between  personal  and 
business  life  is  the  actual — and  not  merely  metaphorical — line 
between  moral  valuations  and  economic  laws  is  equally  hard  to 
maintain.  If  morality  could  be  conceived  as  mere  obedience  to  the 
canons  that  regulate  social  intercourse,  so  that  no  questions  might 
be  raised  as  to  the  morality  of  those  canons  themselves  and  the 
institutions  upon  which  they  are  based,  one  would  still  have  to 
explain  how  business  could  be  conducted  if  there  were  not  in  the 
business  world  just  as  in  private  life  perfectly  well-recognized 
canons  of  reputable  conduct,  and  why  obedience  to  them  is  not  as 
much  a  matter  of  morality  as  scrupulous  conduct  in  any  other  walk 
of  life.  And  of  course  ethics  is  not  merely  the  study  of  established 
mores,  anyhow.  A  whole  system,  such  as  the  present  competitive 
system  including  the  moral  order  which  is  a  coherent  part  of  it, 
may  be  better  or  worse  than  a  conceivable  alternative,  state  social- 
ism for  instance;  it  certainly  is  not  a  matter  of  moral  unconcern, 
as  Fite  seems  to  imply  by  tacitly  assuming  it  to  be  the  only  con- 
ceivable order. 

The  conclusion  seems  to  be  that  visual  imagery  invariably  does 

violence  to  the  facts.     The  picture  of  distinct  fields,  lying  side  by 

side  or  widely  separated,  simply  will  not  do.     Life  may  be  divided 

into  separate  spatial  and  temporal  compartments;  but  that  division 

is  purely  formal.     It  has  nothing  to  do  with  the  definition  of  the 

sciences. 

Ill 

The  dominance  of  sounds  over  the  human  mind  is  probably  still 
more  complete  and  inescapable  than  that  of  pictures.  The  suscep- 
tibility of  even  the  stoutest  mind  to  the  charm  of  rhyme,  cadence, 


DEFINITION  OF  ETHICS  AND  ECONOMICS  51 

and  alliteration  is  too  familiar  and  too  scandalous  to  warrant 
description.  Philosophers  in  particular  have  always  been  subject 
to  the  poetic  fallacy,  to  such  an  extent,  indeed,  that  one  could 
almost  review  the  history  of  philosophy  in  a  long  series  of  resound- 
ing phrases — macrocosm  and  microcosm,  causa  sufficiens  and  causa 
efficietis,  mundus  intelligibilis  and  mundus  sensibilis.  But  the 
infection  has  not  been  confined  so  closely  to  philosophers  as  to 
render  economists  immune.  One  American  economist,  I  am  told, 
has  reduced  the  entire  social  order  to  three  great  principles :  satiety, 
variety,  and  propriety. 

There  is  another  reason,  however,  besides  that  supplied  by 
aesthetics,  for  the  hold  words  have  on  thinking.  Words  are  in- 
dicative symbols.  Their  use  is  to  represent  something  or  other. 
They  are  very  valuable  and  not  at  all  dangerous  so  long  as  they  are 
representative  of  concrete  objects;  but  as  soon  as  abstract  ideas 
and  complicated  problems  come  in  for  verbal  analysis  the  use  of 
language  at  once  becomes  full  of  danger  for  the  clear  thinker, 
for  it  is  just  as  easy  to  attach  a  word  to  an  unclear  idea  or  to  an 
unsolved  problem  as  to  the  most  carefully  reasoned  conceptions. 
Indeed,  it  is  much  easier;  for  since  we  demand  some  sort  of 
explanation  of  everything,  and  since  most  things  are  beyond 
adequate  explanation,  we  habitually  leap  at  purely  verbal  solu- 
tions. 

Thus  a  child  who  has  no  notion  whatever  of  the  most  obvious 
physical  facts  of  reproduction  is  satisfied  with  the  explanation 
that  his  resemblance  to  his  father  is  due  to  "heredity."  And  a 
highly  sophisticated  person  feels  the  same  satisfaction  with  an 
explanation  which  uses  the  phrases  "Mendelian  unit  character" 
and  "chromatin  material,"  though  of  course  no  one  has  a  very 
clear  idea  what  a  unit  character  is  like  when  it  is  still  resident  in 
the  parent  cell  or  how  it  develops  in  the  earlier  and  determining 
stages  of  cell  division. 

It  is  this  demand  for  an  explanation  and  this  readiness  to  accept 
one  that  is  purely  verbal  that  has  wrought  confusion  in  philosophy, 
for  adequate  solutions  of  philosophical  problems  have  always  been 
pecuHarly  difficult  to  attain.  Thus  Bradley  derides  Spencer  for 
calling  the  unknowable  "God,"  apparently,  says  Bradley,  because 


52  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

he  didn't  know  what  the  devil  it  is.'  And  Spencer  could  with  equal 
logic  cry  "black  pot  and  kettle"  at  Bradley.  Certainly  Spencer's 
knowledge  either  of  God  or  of  the  unknowable  could  hardly  be 
less  than  Bradley's  stock  of  information  about  the  absolute. 
Each  has,  in  fact,  capped  a  complete  and  avowed  skepticism  about 
the  noumenal  world  with  an  ear-satisfying  word  and  let  it  go  at 
that. 

There  would  be  nothing  in  this  to  arouse  a  logician's  scorn 
were  it  not  that  the  word  selected  in  such  instances  invariably 
brings  with  it  unfortunate  complications.  It  is  originally  chosen 
as  a  fair  generalization  of  the  group  of  ideas  for  which  it  stands. 
Yet  inevitably  it  throws  undue  emphasis  in  some  one  direction 
or  carries  over  malapropos  suggestions  from  previous  uses  and  so 
causes  endless  misunderstanding.  Thus  Bradley's  objection  to  the 
employment  of  the  word  "  God"  as  a  description  of  the  unknowable 
would  be  that  it  unquestionably  implies  an  anthropomorphic 
super-personality  in  the  minds  of  most  people — an  implication  that 
is  flatly  contradictory  to  Spencer's  conception  of  the  cosmos.  So 
also  biologists  constantly  object  to  the  glib  use  of  the  word  "hered- 
ity" by  people  whose  knowledge  of  the  mechanism  of  generation 
does  not  enable  them  to  distinguish  between  the  transmission  of 
unit  characters  and  infection. 

Indeed,  it  seems  clear  that  the  actual  meaning  of  any  word 
depends  absolutely  upon  the  context  in  which  it  is  used.  It  has  a 
certain  general  connotation,  hinted  by  the  dictionary,  carried  over 
from  past  usage,  and  it  is  not  held  to  be  properly  used  unless  in  a 
context  somewhat  similar  to  these  others.  Yet  the  exact  shade 
of  meaning  must  be  argued,  not  from  the  a  priori  value  the  word 
has  gathered  from  its  past,  but  only  from  the  particular  ideas 
which  are  obviously  implied  in  the  context  and  intended  there  to 
be  the  meaning  of  this  word. 

If  this  philosophy  of  language  has  any  truth  in  it,  then  it  neces- 
sarily follows  that  it  will  not  do  to  recite  a  pair  of  words  and  con- 
sider that  the  relations  between  the  sciences  for  which  they  stand 
have  been  enunciated.  What  if  ethics  is  the  science  of  "the 
good,"   and    economics    the    science   of   "the    expedient"?     The 

'  Appearance  and  Reality,  p.  128. 


DEFINITION  OF  ETHICS  AND  ECONOMICS  53 

question  what  goodness  and  expediency  mean  in  this  connection 
simply  restates  the  initial  question  as  to  what  ethics  and  economics 
are  here  supposed  to  be.  The  same  is  true  of  the  words  "norma- 
tive" and  "descriptive,"  which  are  supposed  somehow  to  set  off 
the  two  groups  of  sciences  to  which  ethics  and  economics  are 
assigned. 

You  may  revert  to  the  value  aspects  of  the  two  sciences  without 
changing  the  situation  in  the  least.  Thus  a  group  of  men  in 
•Germany  and  America,  voicing  a  general  protest'  against  von 
Wieser's  appropriation  of  all  value  phenomena,  have  described 
ethics  and  economics  as  two  branches  of  "value  theory."  Thus 
ethics  is  the  "Psychologic  der  sitthchen  Wertthatsachen "^  and 
deals  with  "absoluten  Werten,"  while  economics  is  the  "Psy- 
chologic der  relativen  Wertmassbestimmungen."'^  This  involves 
the  suggestion  that  ethics  is  distmguished  by  the  fact  that  it  deals 
with  values  that  are  values,  whereas  the  values  of  economics 
exist  only  with  reference  to  each  other.  But  all  this  obviously 
means  to  generalize  certain  conceptions  of  those  sciences  which  are 
still  in  the  background.  The  contrast-phrases  only  point  back  to 
those  conceptions. 

No  account  of  the  business  of  a  science  and  of  its  relations  to 
other  sciences  can  be  anything  like  adequate  that  does  not  bring 
up  into  the  full  light  of  critical  discussion  those  underlying  notions 
of  the  function  and  the  problems  of  the  different  sciences  which 
have  determined  the  visual  and  auditory  imagery  in  which  those 
sciences  are  commonly  pictured.  This  has  been  clearly  recognized 
by  at  least  one  economist.  Economics,  says  Edwin  Cannan,  is  the 
science  of  wealth.  "And  consequently  I  shall  treat  the  question 
'What  is  wealth?'  as  exactly  the  same  question  as  'What  is  it 
most  convenient  to  take  as  the  subject-matter  of  economics?' 
....  I  will  proceed  therefore  to  ask  what  is  in  fact  the  usual 
subject-matter  of  books  and  lectures  on  economics."''    And  he 

'  Cf.  Meinong,  PsychoJogische-ethischc  Untersuchungen  zur  Wert-iheoric,  p.  5, 
footnote;  Urban,  Valuation,  p.  3;  Perry,  "  Economic  Values  and  Moral  Values,"  Quar- 
terly Journal  of  Economics,  XXX,  445. 

^  Ehrenfels,  System  der  Wert-theorie,  II,  5. 

3  Ibid.,  I,  74.  1  Wealth,  chap.  i. 


54  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

prefers  to  characterize  economics,  not  by  a  verbal  reference  to  a 
subject-matter  that  is  determined  by  its  problems,  but  by  a  state- 
ment of  those  fundamental  problems  themselves,  viz.,  "Why  all 
of  us,  taken  together,  are  as  well  off — or  as  ill  off,  if  that  way  of 
putting  it  be  preferred — as  we  are,  and  why  some  of  us  are  much 
better  off  and  others  much  worse  off  than  the  average.'" 

In  somewhat  the  same  fashion  Perry,  who  regards  ethics  and 
economics  as  ''value"  sciences,  nevertheless  insists  that  he  selects 
the  word  "value  "  because  it  is  a  colorless  term,^  and  that  "interest," 
upon  which  value  depends,  must  be  left  ambiguous,  so  that  the 
meaning  of  those  words  and  of  the  relation  between  ethics  and 
economics  which  they  are  used  to  imply  will  be  determined  solely 
by  his  subsequent  account  of  the  actual  problems  of  those  sciences. 

This  being  the  case,  it  hardly  needs  to  be  mentioned  that  the 
meaning  which  is  infused  into  the  visual  and  verbal  apparatus  of 
understanding  is  directly  contingent  upon  the  adequacy  of  the 
conceptions  which  lie  behind.  Thus  the  phrases  with  which  the 
value  theorists  seek  to  invest  ethics  and  economics  seem  empty 
and  futile  because  their  notions  of  ethics  and  economics  are  wholly 
inadequate.  They  have  devoted  themselves  with  great  fervor  to 
the  psychology  of  evaluation,  a  process  that  has  both  ethical  and 
economic  significance;  but  they  leave  the  institutional  order — 
which  after  all  is  the  determinant  of  most  moral  and  pecuniary 
values — completely  out  of  their  calculations.^  Indeed,  a  thorough 
discussion  of  the  problems  both  of  ethics  and  of  economics  must 
center  in  the  structure  of  society  and  the  changes  it  is  undergoing. 

IV 

'  It  has  been  customary  in  the  past  to  think  of  ethics  as  a  purely 
individualistic  science.  Ethicists  have  busied  themselves  chiefly 
with  a  description  of  the  moral  reactions  of  the  individual  human 
personaHty.     They  have  dealt  with  the  moral  judgment;    their 

'  Wealth,  Preface. 

=  "Economic  Values  and  Moral  Values,"  Quarlerly  Journal  of  Economics,  XXX, 
445- 

3  For  a  very  thorough  and  suggestive  study  of  the  relation  between  problenis  of 
value  and  the  other  problems  of  economic  theory  see  W.  H.  Hamilton,  "The  Place 
of  Value  Theory  in  Economics,"  Journal  of  Political  Economy,  XXVI,  217,  375. 


DEFINITION  OF  ETHICS  AND  ECONOMICS  55 

conclusions  have  been  formulated  in  a  "moral  sense,"  in  the 
"feelings  of  pleasure  and  pain,"  in  the  "categorical  imperative." 

But  that  sort  of  ethics  is  no  longer  possible  today.  In  the  first 
place,  the  moral  traditions  to  which  individuals  give  expression 
are  now  seen  to  be  social  rather  than  supernatural  in  origin.  And 
the  discrepancies  between  the  conscientious  conduct  of  one  society 
and  that  of  another  are  therefore  attributed,  not  to  varying  degrees 
of  insight  into  eternal  truth,  but  to  differences  of  situation  and 
institution.  Consequently  it  is  no  longer  possible  to  exclude  from 
ethics  problems  of  comparative  morality  and  the  question  whether 
all  goodness  and  righteousness  can  be  assumed  to  belong  exclusively 
to  one  stage  in  the  evolution  of  society — presumably  our  own. 

At  the  same  time  it  has  become  increasingly  clear  that  the 
chief  significance  of  a  moral  act  depends,  not  upon  its  effect  on  the 
otherworldly  fortunes  of  the  actor,  but  upon  the  maintenance  or 
the  modification  of  the  moral  traditions  which  are  constituted  by 
the  combined  moral  opinions  of  the  whole  society.  This  means, 
of  course,  that  morality  implies  responsibility,  not  merely  for 
one's  own  soul,  but  for  the  continued  good  health  of  the  social 
order. 

This  being  the  case,  moral  insight  can  hardly  be  described 
merely  as  a  robust  condition  of  the  "conscience"  or  the  "moral 
sense."  Moral  insight  is  insight  into  the  w^hole  structure  of  society; 
the  moral  interest  is  an  interest  that  includes  the  fortunes  of  insti- 
tutions as  well  as  of  individuals.  To  live  a  moral  life  is  to  live  so 
that  the  whole  moral  order  of  society — which  dictates  your  for- 
tunes with  everyone  else's — may  be  infinitesimally  the  better  for 
your  having  lived.  And  that  depends  not  upon  any  specialized 
organ  of  moral  inspiration  but  upon  the  accumulated  wisdom  of  a 
man's  entire  life.  It  is  not  a  special  problem;  it  is  the  problem  of 
living. 

So  it  is  with  ethics.  Its  problem  is  the  problem  of  life  as  a 
whole.  Its  instrument  is  the  accumulated  wisdom  of  the  race.  Its 
product — necessarily  incommensurable  and  even  invisible — is  the 
state  of  the  common  mind  reflected  in  the  institutional  order.  It 
is  not  a  "special"  science  with  a  particular  "field"  and  subject- 
matter  and  with  methods  and  apparatus  peculiar  to  its  task.     The 


56  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

ethical  problem  is  the  general  problem  in  contrast  with  which  it  is 
possible  to  speak  of  others  as  "special." 

This  suggests  the  relation  which  other  sciences  necessarily 
bear  to  ethics.  Taken  all  together  they  comprise  the  accumu- 
lated wisdom  of  civilization.  They  represent  that  knowledge  of 
the  world  and  of  our  own  natures  upon  which  all  progress  in  the 
art  of  living  depends.  Such  at  least  is  the  claim  which  scientists 
are  accustomed  to  make  for  their  work.  "Every  proposition  in 
physics  or  astronomy  or  chemistry  or  zoology  or  mathematics,  or 
any  other  branch  of  science,  is  a  rule  of  conduct  facing  the  future — 
a  rule  saying  that  if  such-and-such  be  true,  then  such-and-such 
must  be  true;  if  such-and-such  a  situation  be  present,  then 
such-and-such  things  will  happen;  if  we  do  thus-and-thus,  then 
certain  statable  consequences  may  be  expected.'" 

It  is,  of  course,  highly  dubious  that  every  science  does  actually 
contribute  solely  to  the  fund  of  knowledge  available  for  the  solu- 
tion of  our  most  pressing  problems.  Indeed,  it  is  possible  to  hold 
quite  the  contrary  opinion.  Not  only  do  some  investigations 
appear  to  be  undertaken  primarily  for  the  delectation,  or  even  the 
endowment,  of  the  investigators,  but  a  great  proportion  of  our 
most  reputable  scientific  research  seems  to  have  as  its  only  impor- 
tant fruit  that  sort  of  "control  over  nature"  which  may  possibly 
be  considered  a  doubtful  blessing.  That  is,  the  question  may  at 
least  be  raised  whether,  as  Veblen  suggests,^  invention  is  not  the 
mother  of  necessity  and  therefore  science  the  grandmother  of  all 
the  ills  incident  to  the  rapid  changes  it  engenders. 

Neither  of  these  charges  can  be  brought  against  economics, 
however.  Not  only  is  ethics  as  a  social  science  directly  dependent 
upon  the  other  social  sciences,  but  it  may  be  fairly  said  that  it  was 
the  study  of  society  that  socialized  ethics  by  compelling  men  to 
see  the  social  origin  and  effects  of  every  act.  Naturally  it  is 
neither  profitable  nor  possible  to  place  a  quantitative  estimate 
upon  the  proportion  of  "social"  and  "individual"  elements  in 
ethics.      To   attempt   to   do   so  would  be  to  revert  to  the  hazy 

'  W.  K.  Clifford,  adapted  by  C.  J.  Keyser,  Human  Worth  of  Rigorous  Thinking, 
P-  173- 

^  In  The  Instinct  of  Workmanship,  and  elsewhere. 


DEFINITION  OF  ETHICS  AND  ECONOMICS  57 

visual  imagery  of  the  pair  of  balances  and  the  separated  physical 
constituents  of  a  mixture.  Ethics  is  wholly  social,  and  there  is  no 
such  thing  as  an  individual,  in  the  sense  that  it  is  absurd  today  to 
think  of  a  "moral  agent"  without  at  the  same  time  thinking  of 
him  as  a  social  product  capable  of  producing  certain  changes  in  the 
social  structure  that  surrounds  him  most  intimately.  It  would 
be  equally  futile  to  attempt  a  quantitative  statement  of  the  impor- 
tance for  ethics  of  the  study  of  the  economic  structure  of  society. 
Every  man  is  an  economic  man,  and  therefore  a  knowledge  of  the 
pecuniary  institutions  that  govern  not  only  conduct  but  belief 
and  predisposition  as  well  is  indispensable  for  an  imderstanding 
of  the  problems  of  living. 

Furthermore  the  contribution  which  economics  makes  to  the 
general  attempt  to  strike  a  solution  of  the  problem  of  living  is 
obviously  its  only  reason  for  being.  Whatever  may  be  the  motives 
which  impel  any  individual  economist,  the  science  finds  its  only 
use  in  its  contribution  to  the  attack  upon  this  general  problem. 
An  individual  economist  may  be  a  "pure"  scientist  in  the  sense 
that  he  is  not  consciously  trying  to  be  of  any  use  in  the  world,  or 
he  may  be  a  "practical"  economist  in  the  sense  that  he  is  using 
his  special  knowledge  for  his  own  pecuniary  gain.  Yet  he  cannot 
gainsay  the  fact  that  the  one  important  effect  of  increased  under- 
standing of  economic  institutions  is  an  increased  capacity  on  the 
part  of  society  at  large  to  manage  its  affairs. 

In  this  sense  the  problem  of  economics  is  to  contribute  its  study 
of  industrial  society  to  the  solution  of  the  problem  of  living.  It 
represents  one  phase  of  the  general  moral  problem.  It  has  special 
problems  of  its  own — questions  of  fact  about  the  pecuniary  order; 
but  the  question  of  fact,  "What  is  the  nature  of  the  economic 
organization  of  society?"  draws  all  its  significance  from  the  larger 
question,   "Wherein  ought  the  existing  order  to  be  altered  ?" 

This  conception  of  the  relation  between  ethics  and  economics 
is  not  original  or  new.  Indeed,  the  objection  that  is  most  likely 
to  be  made  to  it  is  that  it  is  so  obvious  and  at  the  same  time  so 
general  that  it  makes  no  contribution  to  either  science.  But, 
after  all,  that  is  in  the  nature  of  the  case.  Philosophizing  seldom 
if  ever  unearths  new  and  hitherto  unsuspected  truths.     Its  product 


58  RELATIONSHIP  BETWEEN  ETHICS  AND  ECONOMICS 

is  far  more  likely  to  take  the  form  of  a  certain  attitude  toward  the 
problems  and  perplexities  of  life.  When  one  philosophizes  about 
the  sciences  one  must  not  expect  to  turn  up  new  facts,  as  in  an 
experimental  research.  But  one  may  reasonably  hope  thereby  to 
achieve  a  larger  vision  of  what  one  is  about,  in  ethics  and  in  eco- 
nomics, and  to  that  extent  to  add  somewhat  to  the  precision  and 
relevancy  of  one's  ethical  and  economic  speculation;  for  if  the 
attempt  to  understand  the  relation  between  the  two  sciences  leads 
ethicists  and  economists  away  from  superficial  metaphorical  con- 
ceptions to  the  most  fundamental  characteristics  of  their  work,  all 
their  future  labor  must  necessarily  express  a  somewhat  clearer 
perception  of  its  own  meaning  and  purpose. 

There  is  also  something  to  be  gained  in  humbleness  of  spirit; 
for  if  the  whole  problem  of  living  is  the  business  of  ethics  it  is 
evident  that  the  professional  ethicist  can  hardly  appropriate  for 
himself  the  solving  of  that  problem,  nor  can  the  economist  fail  to 
see  that  the  task  which  devolves  upon  him  demands  that  he  be  a 
student  of  ethics  ex  officio.  For  one  may  call  one's  self  a  physicist, 
but  not  a  philosopher.  Philosophy  is  every  man's  business;  the 
professional  students  of  ethics  are  only  the  spokesmen  for  the 
philosophical  insight  of  all  the  world. 

They  exist,  not  to  save  everyone  else  from  thinking,  but  to 
stimulate  thought.  Theirs  is  not  the  impossible  task  of  solving  the 
problem,  but  that  of  directing  the  attention  of  others  to  its  vastness 
and  its  difficulty.  It  is  for  them  to  call  upon  every  man,  economist 
and  chemist,  theologian  and  geographer,  to  be  an  ethicist  himself 
and  to  play  the  part  which  is  assigned  to  him,  not  narrowly,  but 
with  a  clear  vision  of  the  final  significance  of  his  own  work  and  of 
the  other  sciences  as  well. 


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